Volvo Group’s net sales increased by 13% during the third quarter of 2007. Adjusted for changes in currency exchange rates and acquired and divested units, sales declined by 1%.
“In the third quarter, we experienced continued split development in our markets,” president/CEO Leif Johansson said. “Demand remained strong for the Volvo Group’s products and services in most of our markets in Europe, Asia and South America, while demand continued to be weak in North America.
“Sales in Asia increased through the contributions from the acquired companies Nissan Diesel, Lingong and Ingersoll Rand’s road development operations, combined with increased demand in most markets. Asia has developed into our second largest market. We currently have a significantly better balance in our geographic presence than previously. More than 40 percent of our sales were generated in markets outside Western Europe and North America, which have traditionally been our home markets.
“In North America, the truck market remained weak, while at the same time demand for the Group’s other products was subdued. Within the North American truck operations, many people have been working hard to resolve the interruptions we experienced in manufacturing following the production changeovers earlier this year. We now see that production is flowing increasingly more smoothly. In North America, a previous agreement between Mack Trucks and the United Auto Workers (UAW) union expired on October 1. The contract has been extended until October 31, with negotiations currently ongoing with the UAW.
“Continued increased profitability in Customer Finance but operating loss for Buses
Construction equipment has a strong product portfolio and is continuing to grow at a rapid pace. Sales rose 37% during the quarter. Profitability did not quite keep pace, but was negatively impacted by a labor conflict in South Korea and cost increases resulting from a production rate exceeding peak capacity.
“Buses reported a loss during the third quarter. A reduction in deliveries resulting from production disruptions related to the introduction of EU4 engines and increased losses in Mexico adversely affected earnings. Buses has been experiencing problems for some time and strong measures will be required to reverse that trend and return profitability to satisfactory levels.
“Moving toward 2008, we are preparing ourselves for continued strong demand in Europe, with a truck market that is projected to increase by 5-10%. In North America, we expect that the demand for trucks will pick up gradually during 2008.”