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By Ian Edmondson
Of DOW JONES NEWSWIRES
STOCKHOLM -(Dow Jones)- AB Volvo (VOLV-B.SK) Friday said demand for trucks stabilized in the third quarter as the world number two truck maker by sales reported a fourth consecutive quarterly net loss.
"There are some positive signs indicating that the decline in demand has bottomed out and that we are now beginning a gradual recovery," said Chief Executive Leif Johansson.
The Gothenburg, Sweden-based maker of trucks, buses and construction equipment had a net order intake of 31,998 trucks in the quarter - stable from the year ago quarter but up 20% from the second quarter of this year, when Volvo reported its biggest ever quarterly net loss.
The rise was largely due to European truck orders, which surged to 8,189 from just 115 last year. All other regions showed a slower rate of decline, although they remain at low levels.
Truck companies like Volvo have seen orders plummet in the last year as customers cut back on new purchases. Volvo stuck to its July forecast that the total European market for heavy trucks will be at least halved in 2009 compared with 2008 and that the North American market will decline by 30%-40%.
In response to falling demand and lower production levels, Volvo said it had cut employee numbers by 2,170 in the quarter and a further 2,500 permanent, temporary and consultant jobs would be lost by the end of the year. Volvo had 92,066 employees at the end of the third quarter, down from 101,381 at the end of 2008.
Net loss in the three months to Sept. 30 was 2.92 billion Swedish kronor ($424.1 million) compared with a profit of SEK1.98 billion last year. The loss was an improvement on the SEK5.57 billion loss in the second quarter and beat forecasts of a SEK3.33 billion loss.
Sales fell 31% to SEK48.48 billion from SEK69.78 billion and the company swung to an operating loss of SEK3.29 billion from a profit of SEK3.18 billion a year earlier. Analysts had expected sales of SEK49.39 billion and an operating loss of SEK3.75 billion.
Handelbanken analyst Hampus Engellau said sales were largely in line and there were positive signs from order intake. He has an accumulate rating on the stock with a SEK75 price target.
Volvo shares in Stockholm closed Thursday at SEK66.50, valuing the company at SEK141.54 billion, up by around a third in the past six months.
Germany's Daimler AG (DAI.XE) released preliminary third-quarter earnings Monday which showed its truck division reporting a loss before interest and tax of EUR127 million while Swedish truck maker Scania (SCV-A.SK) reports earnings Monday.
U.S. construction equipment maker Caterpillar Inc. (CAT) Tuesday exceeded third-quarter earnings expectations with a $404 million net profit and said there were encouraging signs that an economic recovery may be underway.
Company Web site: http://www.volvo.com
-By Ian Edmondson, Dow Jones Newswires; +46-8-5451-3094; ian.edmondson@dowjones.com