Volvo slashes North American truck forecast after weak Q3

(Sharecast News) - Shares in Volvo slid into reverse on Friday after the Swedish truckmaker slashed its North America truck market outlook after ongoing weakness across the region kept a lid on growth in the third quarter.

The company, which makes heavy trucks, buses, and construction equipment and runs separately to the namesake car brand, said net sales were SEK110.7bn during the quarter ($11.72bn), just 1% higher than last year at constant currencies but slightly shy of the SEK111.2bn consensus forecast.

Sales growth across Europe were up 4% at SEK47.3bn, but "difficult market conditions" led to declines of 14% and 16% in North and South America, respectively.

When factoring in currency movements, net sales were down 5% over last year.

Net income slumped to SEK7.5bn from SEK10.1bn the year before, well short of the SEK8.6bn expected by the market, with the bottom line negatively affected by increased material, manufacturing and tariff costs.

"We are in a period with weaker demand in our key regions and with increased uncertainty in North America," said chief executive and president Martin Lundstedt.

"We have adjusted our operations, applied strict cost control, remain firm on commercial conditions and drive our service business."

Looking ahead, the company cut its full-year forecast for North American truck deliveries by 10,000 to 265,000, representing a 10% decline on last year, while estimates for China were hiked by 50,000 to 760,000, representing 22% growth. All other forecasts were left the same.

Shares dropped 7.1% to SEK249.20 by 1341 in Stockholm.