Volvo truck sales keep on truckin' in the US

With the United States economy continuing to fire on all pistons sales by Swedish lorry maker Volvo Group rose by nearly a third in North America in the latest quarter.

With overall sales up by a fifth, Volvo Group's net profit leapt by 38.6% to 7.46 billion kronor (720 million euros, $825 million).

Reaching full potential

It also managed to increases its adjusted operating margin to 11.1%, beating the average of 10.4% expected by analysts surveyed by the SME Direkt agency.

READ: Volvo reports record sales for the first half of 2018

"Although this is the best third quarter ever for the Group, it does not mean that we have reached our full potential.

"There is more to do to improve profitability and drive cash flow," chief executive Martin Lundstedt said in a statement.

Overall, sales of trucks rose by 23% in monetary terms, while those of heavy construction equipment rose by 24%, increases which investors may interpret as a signal the transportation and construction sectors are strong.

"The high activity level in the North American economy translates into a strong freight environment with high transport volumes and good freight rates.

Strong sales in North America

"This leads to customers both renewing and expanding their fleets, a development which is expected to continue into 2019," said Lundstedt.

However, the company did acknowledge the strong sales in North America were stretching its supply chain.

For 2019, the firm expects stable overall demand, although truck sales are expected to slide by 5% in Europe.

                                                                             Image: AFP

On Tuesday, Volvo Group disclosed it had discovered a problem in the emissions control systems for trucks and busses that are primarily sold in Europe and North America, which caused its share price to tumble.

The premature wearing out of a component could cause engines to exceed emissions limits for harmful nitrogen oxides, the company said.

"A full analysis of the issue is not completed and it is not possible to assess the financial impact at this stage; however, the cost could be material," it said in a statement.

The firm generates more than two-thirds of its sales in Europe and North America, selling trucks under the Volvo, Mack, and Renault Trucks brands.

Its shares were down 2.7% in morning trading on the Stockholm stock exchange, which was up down 0.9% overall.