Volvo the Swedish truck maker forecast a steeper than had been expected drop in the heavy duty North American truck market for 2016 and added that it would cut its production there after it posted a slightly smaller rise than predicted in its earnings for the fourth quarter.
Volvo, which is one of German Volkswagen and Daimler’s rival truck brand, has had to contend with falling demand for its commercial vehicles across the U.S. as well as Brazil and a plummeting of purchases of its equipment for construction across China.
While truck sales across Europe are growing, the ability of the group to parry downturns in other regions is a big test for the leaner company the Swedish vehicle maker has sought to carry out through a number of years of cost cuts, targeted for this year at $1.17 billion or 10 billion Swedish crowns.
The biggest company in Sweden by revenue announced that its adjust operating profit increased to just over 4.57 billion crowns from one year ago of 3.02 billion, which just missed the forecast of 4.72 billion.
Volvo, based in Gothenburg, said the cuts in costs to lift its profitability to that level of its nimbler rivals like Scania made by VW and which saw over 5,000 cuts in jobs, were nearing an end.
Martin Lundstedt the CEO at Volvo said the company now is entering the next phase. The former boss of Scania appointed to the helm last year after the sacking of Olof Persson amidst investor impatience over its progress on the efficiency drive.
A slowing economy in the U.S., weak data on freight and destocking of inventories have hit orders for trucks recently though sale at Volvo, working off a huge backlog, have thus far held their own.
In Europe, a bright spot recently for many manufacturers, has seen orders remain strong.
Volvo, which sells its trucks under the Renault, Mack and UD brands along with its namesake line, increased its outlook for the truck market in Europe but pulled back expectations for both North America and Brazil.