Truckmaker Volvo's second-quarter profit rises, North America orders jump

STOCKHOLM, July 17 (Reuters) - Swedish truckmaker Volvo Group reported on Friday a 35% rise in second-quarter profit and said order intake in North America more than doubled after years of sluggish demand.

Volvo, one of the world's biggest makers of trucks, buses and construction machinery, said lower spending in areas such as research and development had more than offset the impact of U.S. tariffs and higher freight and material costs. 

Truck order intake at the group, whose biggest market is Europe, rose 33% as intake in North America soared 122%. 

"(Truck) demand in Europe and South America continued to grow gradually, while it was exceptionally strong in North America," CEO Martin Lundstedt said in a statement.

Shares in the company were roughly unchanged in mid-morning trade. Year-to-date, they are up 16%.  

COMPANY LIFTS EUROPEAN TRUCK MARKET OUTLOOK

The pick-up in North America orders comes after a few years' market weakness in the region as stalling haulage activity led to falling freight rates and truck overcapacity. 

Volvo said the sentiment has yet to show in actual truck retail sales, which were still down in the region in the quarter.   

"Truck industry production levels, deliveries and retail sales are expected to increase in the second half of the year," it said of the region.

Volvo nudged up its European truck market outlook for this year to 315,000 new registrations from 310,000 forecast in April. It reiterated its North America market retail sales forecast of 265,000 trucks. 

'WATCHFUL AND RESPONSIVE' TO EXTERNAL PRESSURE

Second-quarter operating profit was 13.5 billion crowns ($1.40 billion) against a year-earlier 9.96 billion and a mean forecast in an LSEG poll of 13.6 billion. Organic sales rose 7%, with vehicle and service sales growing at roughly the same pace.

Besides its main product trucks, Volvo also makes buses, excavators, wheel loaders, haulers and engines for boats and its heavy construction machinery. It is also developing self-driving trucks.

"Looking ahead, we remain watchful and responsive to geopolitical developments, trade policy shifts and the speed of transition into zero-emission transport," Lundstedt said. 

"We are gradually offsetting cost increases from inflationary pressure through commercial discipline and operational efficiency." 

($1 = 9.6654 Swedish crowns)

(Reporting by Anna Ringstrom; Editing by Terje Solsvik and Jan Harvey)