* Q3 operating profit SEK 7.02 bln vs forecast 6.20 bln
* Q3 truck order intake +32 pct vs forecast +15 pct
* Raises Europe, North America 2017 market outlook
(Adds analyst comment, Daimler Trucks results)
By Niklas Pollard and Johannes Hellstrom
STOCKHOLM, Oct 20 (Reuters) - Sweden's AB Volvo
reported a bigger-than-expected rise in quarterly core earnings
on Friday as stronger demand for heavy trucks more than offset
costs stemming from strains on its supply chain.
Sweden's biggest manufacturer by sales also raised its
outlook for truck markets on both sides of the North Atlantic
this year and forecast a further strong recovery in sales of
commercial vehicles in North America in 2018.
"These are blow-out numbers," Handelsbanken Capital Markets
analyst Hampus Engellau said. Handelsbanken has a "Buy"
recommendation on the stock.
Volvo shares gained 6 percent in early business, building on
gains of 45 percent this year.
Volvo and rivals in the truck industry such as Germany's
Daimler and Volkswagen have hit a sweet
spot this year with rising or already robust demand in all major
commercial vehicles markets.
The broad upturn in demand was also in evidence in German
auto giant Daimler's quarterly results, also released on Friday,
with a double figure rise in deliveries and 32 percent jump in
earnings at its trucks division.
Yet the buoyant demand has also come at a cost, with
strained supply chains leading components maker SAF-Holland to
scale back its 2017 margin outlook this month, while Volvo's
profitability was dented in the second quarter.
Volvo said stretched components supply had continued to have
its impact in the third quarter, but with a 13 percent rise in
truck deliveries and sharply higher earnings in its construction
equipment arm, this was easily shrugged off.
Adjusted third-quarter operating profit at Volvo rose to
7.02 billion Swedish crowns ($861 million) from 4.85 billion
crowns in the year-ago period and beat a mean forecast of 6.20
billion crowns seen in a poll of analysts.
"There are really no negatives here," Engellau said.
"Construction Equipment is really strong and the trucks
business continues to deliver in a seasonally weak quarter. Also
order intake is extremely strong and it seems demand will
accelerate even further ahead."
Volvo has begun reaping the benefits of a 10 billion crown
cost-cutting drive and set a target in August to reach its
highest profitability since the sale of its car making arm to
Ford nearly two decades ago.
Gothenburg-based Volvo said order intake of trucks at the
group, which also includes brands such as Mack, Renault and UD
Trucks in its stable, grew 32 percent in the quarter, beating
the 15 percent rise seen by analysts.
($1 = 8.1513 Swedish crowns)
(Reporting by Niklas Pollard and Johannes Hellstrom; Editing by
Subhranshu Sahu/Keith Weir)
First Published: 2017-10-20 08:12:52
Updated 2017-10-20 09:09:35
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