Truck maker Volvo profit falls less than expected amid pandemic pain

STOCKHOLM (Reuters) – Sweden’s AB Volvo (VOLVb.ST) reported a smaller-than-expected fall in quarterly operating earnings on Thursday as service sales held up in the face of tumbling sales and orders of its trucks as demand evaporated in the face of the coronavirus.

The rival of Germany’s Daimler (DAIGn.DE) and Traton (8TRA.DE), with its Scania and MAN brands, warned its net order intake of trucks had been negative since the end of March as customers cancelled planned purchases due to the pandemic.

Already facing a cyclical slowdown before the novel coronavirus outbreak brought markets and production to a shuddering halt in Europe and North America last month, the slump is set to test the resilience in Volvo that in the past struggled to handle violent swings in demand.

Adjusted operating profit at the maker of trucks, construction equipment, buses and engines fell to 7.1 billion Swedish crowns ($704 million) from a year-ago 12.7 billion to come in above analysts’ mean forecast of 6.0 billion, according to Refinitiv estimates.

“Our ambition is to cautiously restart our manufacturing operations in Europe, North America and Brazil on low levels at the end of April and beginning of May,” Volvo CEO Martin Lundstedt said.

“We will then gradually increase output to a new, lower level of demand.”

While factories may be stirring back to life, uncertainty lingers as to what demand there will be to meet the output.

Order intake of its trucks, which includes brands such as Mack and Renault, fell only 16% year-on-year in the first quarter but Volvo warned the decline had been 75% in March from February and with a net negative since then.

Volvo’s outlook from a now distant January, that saw the market dipping just under 15% in Europe and nearly 30% in North America this year, as expected went out the window, with the company saying it was not meaningful to try to predict.

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