Volvo AB Q1 profit beat estimates on trucks demand

Volvo AB, the world's second- largest truckmaker, reported its first profit in more than a year, beating analysts' estimates and sending the stock as much as 10 percent higher in Stockholm.

First-quarter net income was 1.7 billion kronor ($234 million), or 0.83 krona a share, compared with a loss of 4.2 billion kronor, or 2.09 kronor, a year earlier, the Gothenburg, Sweden-based company said today in a statement. Analysts had projected a loss of 8 million kronor, according to the average of eight estimates compiled by Bloomberg.

Trucks and construction equipment, the two largest divisions that accounted for 81 percent of Volvo's revenue, both returned to an operating profit. Volvo lowered costs by cutting thousands of jobs after the financial crisis. Daimler AG, the world's largest truckmaker, improved its outlook for its trucks division this week.

"It's a hallelujah moment for those who are positive on Volvo," Niclas Hoglund, a Stockholm-based analyst at Swedbank Markets who recommends investors buy the shares, said in a phone interview. "It's a very good result and order intake."

Volvo rose as much as 8.45 kronor to 90.20 kronor, the steepest increase in a year, and traded at 89.70 kronor as of 9:17 in Stockholm, valuing the company at 190 billion kronor.

Revenue rose 4.4 percent to 58.6 billion, exceeding analysts' 55.6 billion-krona estimate. Construction equipment sales advanced 36 percent to 11.1 billion kronor.

Truck Orders

Orders for trucks more than doubled in the quarter to 43,936 vehicles from 20,183 a year earlier, Volvo said. The increase shows that sales volumes will rise, Hoglund said.

Volvo maintained its forecast that the market for heavy trucks sold in Europe will grow 10 percent in 2010 and as much as 30 percent in North America.

"With a gradually improved global economy, demand is once again increasing for the group's products," Chief Executive Officer Leif Johansson said in the statement. "The measures we have implemented to cut costs have generated good results throughout the group."