Volvo profits dive, expects weak start to 2013

Swedish heavy truck and construction equipment maker Volvo expects a weak start to 2013 as orders decline due mainly to the crisis in Europe, the group said Wednesday as it announced plunging profits for 2012. Volvo registered a net profit of 841 million kronor (98 million euros, $133 million) in the fourth quarter, down by 82 percent from the same period a year earlier. For the full-year 2012, the group posted a profit of 11.3 billion kronor, a 38-percent drop from the previous year. Sales slipped by two percent for the full-year, to 303.6 billion kronor, but the trend deteriorated in the fourth quarter when they slid by 17 percent to 71.8 billion kronor. That was below market expectations, with analysts surveyed by Dow Jones Newswires expecting quarterly sales around 74.6 billion. "In the fourth quarter demand for trucks continued to be subdued and we saw orders coming down by 10 percent compared to last year," Volvo chief executive Olof Persson said in a statement, citing "continued sluggish demand in southern Europe." The coming year also looked to be off to a bad start. "The first quarter of 2013 will also be difficult as a result of the low order intake in many markets during the fourth quarter of 2012," Persson said. "Profitability will be affected by low capacity utilisation, high spend levels in research and development and costs associated with the launch of new products," he added. Volvo announced in late January that it expects to overtake Daimler as the world's leading producer of heavy trucks, after acquiring a 45 percent stake in Chinese auto manufacturer Dongfeng.