STOCKHOLM (Reuters) - Global truck maker Volvo (ST:VOLVb) posted a surprise rise in core earnings on Friday and forecast flat 2015 industry-wide heavy-duty truck sales in its home market, Europe, in contrast to further growth in a far more robust North America.
The group, vying for market leadership with Germany's Daimler (DE:DAIGn) and Volkswagen's (DE:VOWG_p) Scania and MAN brands (DE:MANG), also said it was stepping up cost cuts in its quest to boost profitability that has often lagged its rivals.
"For 2015, we forecast that the market for heavy-duty trucks will be on the same level as in 2014 in Europe, Japan and China, on a higher level in North America and India and on a lower level in Brazil," the company said in a statement.
Volvo, Sweden's biggest company by sales and top private sector employer, said operating profit excluding restructuring charges rose to 2.91 billion Swedish crowns (250.02 million pounds) from a year-ago 2.50 billion, beating a mean forecast of 2.07 billion in Reuters poll of analysts.
While U.S. truck sales have picked up pace, demand in Europe has been far more patchy, reflecting both the desultory state of the underlying economy and the sharp market swings brought on by new green engine rules at the turn of the year.
Gothenburg-based Volvo, which sells trucks under the Mack, Renault and UD brands as well as its own name, raised its forecast for industry sales in North America and stood by its outlook for only a moderate slump in Europe.
Regardless of market vagaries, Volvo is under growing pressure to produce clear evidence a sweeping efficiency scheme involving thousands of job losses is lifting its profit margin towards its target of a 3 percentage point improvement.
The company said it planned to cut an additional 3.5 billion crowns of structural costs by the end of next year to bring the estimated full year savings to 10 billion in 2016.
Volvo, which also has a large construction equipment business, said its operating margin excluding restructuring charges rose to 4.3 percent in the quarter from a year-ago 3.9, topping the 3.2 percent seen by analysts.
Its margin was nearly 9 percent when Chief Executive Olof Persson launched the efficiency drive in 2012.
(Reporting by Niklas Pollard and Johannes Hellstrom; Editing by Alistair Scrutton)