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Volvo AB earnings surge 58% on cost cuts, construction equipment
[MUNICH] Volvo AB first-quarter earnings surged 58 per cent as the truckmaker reduced spending and sold more construction equipment Adjusted operating profit jumped to 7.03 billion kronor (S$1.1 billion) from 4.46 billion kronor a year earlier, the Gothenburg, Sweden-based company said Tuesday in a statement. That compares with the average 5.46 billion-krona estimate from eight analysts compiled by Bloomberg.
Volvo is navigating uneven demand for commercial vehicles in its key markets. While European truck orders been buoyed by improved economic prospects, including German business confidence at a six-year high, demand in the US has flagged following a period of higher purchases. That weakness may turn around as US President Donald Trump has a goal of lifting growth in the world's largest economy to 3 per cent.
Volvo has undergone a cost-cutting program to help achieve a better return on sales, which during the first quarter widened to 9.1 per cent from 6.2 percent a year earlier. Daimler AG, the world's biggest maker of commercial vehicles, said this month that it's reducing the workforce at its German plants to cut US$434 million in fixed costs.