Stockholm: World number two truck maker Volvo slipped to a surprise operating loss in the fourth quarter as plunging demand savaged order intake and said its key European market was likely to fall further this year.
The Swedish company reported an operating loss of 999 million crowns ($120 million) in October through December. The mean forecast in a Reuters poll of 18 analysts was for earnings to fall to 475 million from a year-ago of 5.78 billion.
But the high level of uncertainty over how the truck maker would cope with the dramatic downturn was reflected in the wildly differing analysts estimates ahead of the report, ranging from a loss of 2.60 billion to a 3.37 billion profit.
The economic downturn spawned by the global financial crisis has slammed the highly cyclical demand for heavy-duty trucks across Europe in recent months, leaving truck makers such as Volvo scrambling to cut costs and production capacity.
Volvo, which has unveiled plans to cut thousands of jobs to adjust to the weaker demand, said order bookings of its trucks fell 82% year-on-year in the final quarter of last year as cancellations gave it a negative order intake in its key European market.
The company said it expected the European heavy-duty truck market to decline to between 180,000 and 220,000 units this year from well over 300,000 vehicles in 2008 while the North American market in 2009 was seen unchanged to slightly lower.
“Customers were reluctant to place new orders while at the same time cancellation of already ordered trucks continued,” the company said in a statement.
“In Europe net order bookings were negative in October and November but slightly positive in December as the high cancellation rates slowed down towards the end of the year.”