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April 28, 2011 3:38 am
Volvo, the Swedish truckmaker, has welcomed the slowdown in its Asian business as a sign that China is settling into a more sustainable growth rate.
Leif Johansson, chief executive, said the 4 per cent drop in Asian truck orders in the first quarter compared with the previous year assured him that the Chinese economy was not overheating.
“We’ve said for more than a year that we would prefer a slightly slower growth rate in China so it’s good to see that we do not have another quarter of 25 per cent growth,” he told the Financial Times.
“There seems to be a renewed focus from Chinese authorities on promoting sustainable growth rather than boom and bust,” he said.
Strong demand from China and other emerging markets helped Volvo recover from the financial crisis when demand for trucks dropped in Europe and North America.
Mr Johansson said the mature western markets were rebounding, although demand remained patchy in Europe, with strength in the northern and eastern markets offset by continued weakness in the crisis-hit south. European orders rose 46 per cent in the three months to March, while North American orders more than tripled.
Volvo also raised its forecasts for the European and North American heavy truck markets this year. It predicted sales of 230,000-240,000 vehicles in each market, up from the previous estimate of 220,000.
Mr Johansson said while sales remained below pre-crisis volumes in both markets, overall output had recovered to previous levels due to growth in the emerging markets.
As China showed signs of slowing, demand in Brazil rose, with South American orders up 63 per cent in the quarter.
First-quarter net profits more than doubled to SKr6.5bn ($1.08bn) on sales of SKr72bn, up 22 per cent.
Volvo said the impact of the Japanese earthquake on Volvo would be “relatively limited, but uncertainty remained high”. The company’s Japanese unit, UD Trucks, was shut for more than two weeks after the disaster.
In March, Volvo named Olof Persson, head of the construction equipment business, to succeed Mr Johansson as chief executive. Mr Johansson will leave the group in summer after 14 years to join Ericsson as chairman.
Swedish truckmaker Scania also said its first-quarter net profits also rose to SKr2.51bn, up nearly three-quarters from last year. Orders rose 19 per cent but were lower than Volvo’s. The company, which is majority-owned by Volkswagen of Germany, maintained a cautious European outlook.
Scania did not give an update on its merger talks with MAN, the German truck and engine maker, 29.9 per cent-owned by Volkswagen.
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