UPDATE 1-Volvo April truck shipments drop on weak S.America demand

Wed May 21, 2014 3:17am EDT

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STOCKHOLM May 21 (Reuters) - World number two truck maker Volvo posted a surprise drop in deliveries of its trucks in April on weaker demand in South America, where shipments fell twice as much as expected.

Total shipments at the maker of Volvo, Mack, UD Trucks and Renault trucks were down one percent year-on-year against a mean forecast in a Reuters poll of analysts for an increase of 4 percent.

In South America, deliveries plunged 30 percent. In Volvo's top market, Europe, they also declined, dipping 8 percent.

The company, which vies for market leadership with Germany's Daimler AG, said it suffered from lower demand in South America and an inventory reduction by its dealers.

"Production rates in Brazil have been reduced during the second quarter," it said in a statement.

On the bright side, deliveries to North America, its second-biggest market after Europe and accounting for over a quarter of its truck sales, rose 14 percent and Volvo said it would moderately increase production in the region at the end of the second quarter to meet increased demand.

Truck makers have seen U.S. demand gaining pace, leading Volvo in April to raise its guidance for deliveries this year.

Shipments to Asia were also up 14 percent.

Volvo shares were down 2.0 percent at the start of trade on Wednesday, while the broader Stockholm blue-chip bourse was down 0.3 percent. (Reporting by Mia Shanley; Editing by Mark Potter)