Volvo AB’s efforts to capitalize on increasing truck demand bore fruit in the second quarter as profit rose more than analysts expected.
Second-quarter adjusted earnings before interest and tax surged 37 percent to 11.5 billion kronor ($1.3 billion), the world’s second-largest truckmaker said in a statement. Analysts surveyed by Bloomberg had estimated profit of 10.1 billion kronor, on average.
“Demand in our main markets was solid in the second quarter of 2018,” Chief Executive Officer Martin Lundstedt said in the statement. “Our truck business had a good sales development and increased profitability despite a continued stretched situation in parts of the supply chain.”
Amid an economic recovery in Europe and booming freight demand in the U.S., Volvo factories have been running at full speed, and the company has struggled to get vital components to production lines in time. That’s forced the Gothenburg, Sweden-based company to seek out more costly options, including air-freight, and has prevented it from reaching its long-term profitability target. In the second quarter, the company’s operating margin surpassed the 10% goal for the first time, although supply constraints continued to weigh on the results, primarily in North America.
Volvo’s total truck orders increased 10 percent in the quarter, driven by a 63 percent increase in North America. The company said it still expects 300,000 new truck registrations in the North American market this year.
