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Volvo Group’s second-quarter earnings beat analyst expectations, as truck deliveries rose and the company increased its market forecasts for North America and Europe this year.
The Swedish company has been reaping the rewards of roaring demand for trucks in the last couple of years, and adjusted operating income surged 31% to $1.6 billion, beating analyst expectations.
An economic slowdown is causing a downturn in future demand. Volvo’s second-quarter truck-order intake fell 21% from a year earlier. Even so, the company increased its industrywide delivery forecasts by 4.8% for North America and 6.7% for Europe.
CEO Martin Lundstedt has brought profitability up, surpassing an ambitious margin target of 10% of sales introduced in 2017. His task is now to defend the figure, which was 12.5% in the second quarter, as demand falters.
Volvo is also facing stiff competition from newly listed Traton SE, which combines Germany’s MAN SE and Lundstedt’s former employer, Scania AB. The Volkswagen AG unit commands a third of the market for heavy-duty trucks in Europe, and aims to expand in new countries to challenge global leaders Daimler AG and Volvo.
In the second quarter, the group’s truck deliveries jumped 10%, propelled by a 35% surge in North America. The European market share for heavy-duty trucks under the Volvo brand narrowed to 15.4% from 16.7% a year ago. Its Renault-branded trucks gained market share to 8.6% from 8.5% in the 2018 period.