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July 19, 2018 12:00 PM, EDT

Volvo Profits Jump 47% on Sales Growth

Volvo VNL A Volvo VNL 860 Sleeper on display at 2017 NACV by John Sommers II for Transport Topics.

Volvo AG reported second-quarter operating income of $1.4 billion, or 50 cents a share, a 47% increase from $939 million, or 32 cents, in the same period a year ago.

The world’s second-largest truck maker reported net sales globally rose 18% to $11.6 billion from $9.8 billion in 2017’s second quarter. North American net sales rose 18% to $3.1 billion from $2.6 billion.

The Gothenburg, Sweden-based original equipment manufacturer reports results in Swedish krona. Its major industrial divisions include trucks, construction equipment, buses, Volvo Penta, group functions and eliminations. Volvo also releases numbers for its financial services and reclassifications results.

For the truck division, deliveries worldwide rose 14% in the quarter to 59,571 from 52,058, despite a stretched supply chain primarily in North America, according to CEO Martin Lundstedt. Net orders for Volvo trucks rose 10% to 60,656.

“Demand in our main markets was solid in the second quarter of 2018, and both our vehicle and service business continued to grow at a good pace,” he said.

Volvo truck brands include Volvo, Mack, Renault and UD. Of the company’s trucks delivered in the quarter, 57% carried the Volvo brand, 24% Renault, 11% Mack and 8% UD.

In North America, the strong economy combined with capacity challenges drove a heightened demand for highway trucks, Volvo reported. The company reiterated its sales forecast of 300,000 trucks in the region this year, up 28% from 244,417 in 2017.

“In North America, demand increased strongly, primarily driven by growth in the highway segment,” Lundstedt said. “Together with our suppliers, we are working hard to meet demand and reduce delivery times to our customers.”

Lundstedt cautioned customers that supply chain issues would continue to impact deliveries in the near term.

In the second quarter, the net order intake for trucks in North America rose 63% to 15,860 from 9,720. More than 14,000 trucks were delivered to customers in the region. Worldwide, the company had 60,656 truck orders in the quarter.

The truck division had total net sales of $7.3 billion, up 16% from $6.3 billion. Operating income was $809.9 million, a 37% increase from $591.2 million.

In North America, net sales tallied nearly $2 billion, up 22% from $1.6 billion.

The solid results increased Volvo Trucks' market share to 10.9% in June from 8.8%, due to good customer response to its trucks launched in 2017, according to Volvo. However, Mack’s market share fell to 6.9% from 8.2% due to the supply chain challenges.

Volvo also highlighted during its investor presentation several events that occurred during the quarter, including the live Volvo Trucks test with FedEx Corp. of three-truck platoons on a North Carolina highway.

In addition, Volvo Trucks showcased a Class 7 FL electric truck and a Class 8 FE electric truck, though plans call for both to be marketed in Europe in 2019. And Mack Trucks intends to have a fully electric Mack LR refuse model operating in New York City in 2019.