Volvo Second-Quarter profit down, Orders Fall On North America image

Volvo AB, the world’s second-largest truck maker, said second-quarter vehicle orders suffered a deeper-than-expected fall hit by slumping demand in North America and Europe.

After riding high on a strong recovery through 2010 and most of 2011, truck builders are braced for tougher challenges from the euro zone’s sovereign debt crisis and a related slowdown in the global economy.

Operating earnings at Volvo slipped to 7.34 billion Swedish crowns ($1.05 billion) from a year-ago 7.65 billion to come in above a mean forecast for 6.66 billion seen in a Reuters poll of 16 analysts. Tuesday’s report showed a net profit of 4.86 billion kronor ($697 million) in the three-month period, down from the 5.12 billion kronor recorded in the same three months a year ago.

Sales contracts fell to 52,946 vehicles from 65,006 a year earlier, Gothenburg, Sweden-based Volvo said today in a statement. The big impact came from North America where Volvo recorded a drop of 47 percent.

“The decline was mainly driven by the North American market, which had a very high order intake in the second quarter of last year, and a further weakening in Southern Europe,” the company said in a statement.

“Current lower demand means that we are manufacturing at a pace which is slightly too high and are preparing to balance production to meet current demand during the autumn,” Persson said.

Volvo reiterated forecasts from April that European industrywide sales in 2012 will fall to 230,000 trucks, while the North American market will increase to 250,000 vehicles.

Scania AB also reported a decline in second-quarter net profit from the year earlier, reflecting lower vehicle sales volumes and lower capacity utilisation, and said market outlook is difficult to judge despite improved order bookings for trucks in Europe compared with previous quarters.

Daimler AG the world’s largest truckmaker, plans to publish figures tomorrow, while MAN SE is scheduled to report results on July 31.