Volvo truck sales impress market

STOCKHOLM -- Sweden's AB Volvo reported resilient truck sales in 2001, suggesting it was riding out an industry downturn despite a wider than expected 2001 loss. The world's second biggest truck-maker forecast weak markets would continue this year, but its share rose as investors focused on better than expected truck sales rather than poor results at its smaller bus and construction equipment units. "I think people liked the fact that the truck division saw a decline that was much less than expected," said JP Morgan analyst Himanshu Patel. Group sales rose to 180.62 billion crowns ($17.10 billion) from 120.39 billion in 2000, largely reflecting Volvo's acquisition of the truck business of France's Renault SA, including the Renault brand in France and Mack brand in the United States.

That acquisition -- a $1.5 billion deal which gave Renault a 20 percent stake in Volvo -- saw fourth-quarter truck sales double to 33.67 billion crowns while operating income in the unit fell a less-than-expected 14 percent to 591 million crowns. "I also think this is the first quarter in which we are seeing effects of the merger-related synergies," Patel added. Chief Executive Leif Johansson, who reiterated a forecast that the truck market would shrink 10-15 percent this year, said Volvo's truck business was now benefiting from the acquisition. "In its first year the synergy effects came in completely as planned and contributed positively to last year's results," he told a news conference.

Volvo sold its car business to U.S. automaker Ford in 1999. Trucks now account for about 70 percent of Volvo's business. Besides buses and construction equipment, it also makes marine and aero engines. Volvo did not comment on plans for its stake in Swedish rival Scania AB, amounting to 45.5 percent of the capital and 30.6 percent of the votes, which was left over from a merger attempt vetoed by EU competition authorities. The EU has said Volvo must divest the Scania stake by January 2004.