Volvo trucks runs into loss but sees strength ahead

STOCKHOLM: lvo Group, a leading global truck maker, reported a big switch into quarterly loss on Friday, but the outcome was better than expected and the company said prospects were looking up, notably in Asia.

The group, the world's second-biggest producer of trucks, reported a net loss of 2.92 billion kronor (285 million euros, 429 million dollars) for July to September, down from profits of two million kronor in the same period of last year.

"There are some positive signs indicating that the decline in demand has bottomed out and that we are now beginning a gradual recovery," the company's chief executive Leif Johansson said in an earnings statement.

"These signs are the most obvious in the group's second-largest region in terms of sales, Asia, where the economic growth is also reflected in demand for the group's products."

Johansson said that demand for trucks, spare parts and servicing "continued to stabilise" overall in Europe, where signs of recovery had appeared in recent months with major economies France and Germany emerging from recession. Russia and Spain remained weak, however, he said.

"We also see that demand for used trucks is steadily improving in Europe, which indicates that the market has bottomed out and that our customers' businesses are moving in the right direction," he said.

Volvo Group -- which makes trucks, buses and boat and aircraft equipment, but does not include the Volvo Cars brand -- posted its biggest-ever quarterly net loss, 5.57 billion kronor, in April to June this year.

The economic crisis has sharply reduced auto demand, prompting massive job cuts and losses by some of the biggest companies in the sector.

Volvo's third-quarter results were better than expected however, after analysts polled by Dow Jones Newswires had forecast a net loss of 3.3 billion kronor. Net sales were 48.5 billion kroner, slightly less than expected.

The group also "significantly reduced" its operating loss -- a measure of profits before tax and interest -- to 3.3 billion kronor from 6.8 billion in the second quarter, it said, "as a result of cost cutting measures."

Johansson said that tighter environmental standards due to come into force in North America next year had prompted Volvo to develop new trucks with ultra-low gas emissions, and that this new technology would push prices up.

"Price increases may... have a delaying impact on the recovery of demand in 2010," he said.

Volvo's shares surged 3.8 percent to 69 kronor in morning trading on the Stockholm stock exchange, which was up by 0.8 percent overall.