Swedish truck maker AB Volvo on Friday reported a third-quarter net loss of 2.9 billion kronor ($423 million), due to a steep drop in sales in Europe and the U.S., but said demand was stabilizing, particularly in Asia.
It was the fourth consecutive quarterly loss for the company and compares with a previous profit of almost 2 billion in the same three months a year ago.
Revenue in the period plunged more than 30 percent to 48.5 billion kronor from 69.8 billion kronor in the third quarter in 2008.
The biggest drops were recorded in its truck and construction equipment units. Revenue for the truck division, Volvo's largest business area, fell 34 percent in the quarter, mainly because of weaker demand on the European market.
Volvo kept its 2009 heavy-duty truck forecast for that market unchanged, saying it expects it to "be at least halved" from last year.
For North America, where sales also fell steeply, it said it expects the market for heavy-duty trucks to drop between 30 and 40 percent this year from 2008 levels.
Volvo CEO Leif Johansson said that although markets seem to have stabilized, his company "is not relying on our profitability being boosted by a substantial recovery in sales of new products," saying it is still "far below" the long-term trend for sales of new trucks and machines. The company will therefore continue to keep sharp control of costs, he said.
Nonetheless, he said there are signs, particularly in Asia, indicating that fall in demand "has bottomed out" and that the group is on its way toward a gradual recovery.
Sydbank analyst Morten Imsgard said that overall, the report was somewhat stronger that expected. The positives, he said, had little to do with the numbers reported, but rather on the statements made on the future, with indications that the downward demand trend could be turning around. "It's a bit better than what we've heard them say before," he said.
The Volvo share gained 3 percent to 68.50 kronor ($9.98) in early morning trading.
Volvo, headquartered in Goteborg, also makes buses, engines and construction equipment. It sold its car division to U.S.-based Ford Motor Co. in 1999, which now has announced that the car unit is for sale.