* Q3 EBIT 2.5 bln SEK vs forecast 3.3 bln
* Output shift to new models, FX headwind weigh
* Cuts 2,000 jobs
* Truck orders +7 pct y/y vs forecast +31 pct
* Shares fall more than 6 pct
(Adds CEO comments, analyst, share price)
By Niklas Pollard and Helena Soderpalm
STOCKHOLM, Oct 25 World number two truck maker
Volvo posted a sharp drop in third-quarter profit,
hit by a strong Swedish currency and the costs of its biggest
ever introduction of new models.
Volvo, Sweden's largest private-sector employer, also said
on Friday it will cut 2,000 jobs as part of a plan announced in
September to generate annual savings of 4 billion Swedish
The cuts, which represent just under 2 percent of the
Gothenburg-based company's workforce, will affect white-collar
staff and consultants and come as the European truck market
makes a modest underlying recovery.
Volvo shares fell more than 6 percent, while rival Scania
eased 2.6 percent and German competitor MAN SE
, which reports earnings next week, dipped 0.3 percent.
Volvo, which sells under the Renault, Mack and UD Trucks
brands, is in the middle of rolling out more than a dozen new
Volvo and Renault models ahead of tougher new vehicle emissions
This is putting pressure on its production systems, which
are making old and new models in parallel. As a result, the
group missed out on a spike in demand for cheaper, older models
before the emission rules come into force at the year-end.
Volvo, which vies for market leadership by trucks sold with
Germany's Daimler, said third-quarter orders rose 11
percent in Europe, its biggest market. Total orders rose 7
percent, short of a forecast 31 percent rise.
"The available (production) slots for 2013 for (older) Euro
5 trucks from Volvo were sold out during the third quarter,
which had a dampening effect on order intake," the company said,
adding orders at Renault suffered in a similar way.
By contrast, Scania reported an 84 percent increase in
orders in Europe earlier this week, reflecting the roughly
10,000 euro ($13,800) higher price tag for new Euro 6 trucks
compared with the older models.
Unlike Volvo, Scania is only adapting engines to meet the
new emissions rules rather than completely overhauling its truck
"If we look at Daimler and Scania during the quarter, they
had better order intake. Volvo has no different underlying
market than Daimler and Scania have in for example Europe,"
Handelsbanken Capital Markets analyst Hampus Engellau said.
Volvo's core operating earnings fell to 2.50 billion crowns
($392.9 million) in the third quarter from a year-ago 3.48
billion, well below a forecast 3.34 billion in a Reuters poll of
The company said the strength of the Swedish crown
against currencies in emerging markets where it generates
roughly a third of sales but produces far less, had shaved just
over 1 billion crowns off earnings.
Volvo declined to put a figure on costs related to its new
models, which it said would depress earnings for the next two
"In the short term, profitability is impacted by an elevated
cost level related to all the launches, the change-over to new
products and the fact that we currently are producing both the
old and the new generation of products," Volvo said.
Chief Executive Olof Persson told a news conference order
intake so far indicated a "normal" first quarter for its Volvo
brand while Renault was likely to suffer continued weakness.
Deliveries of the older Euro V trucks will run down in
Europe next year while a sales boom in Brazil could also peter
out if the government incentives underpinning it are not fully
Volvo, which also makes buses, construction equipment and
engines, trimmed its forecast for the North American truck
market this year said it expected most markets to run at about
the same level in 2014 as in 2013.
($1 = 6.3631 Swedish crowns)
($1 = 0.7245 euros)
(Additional reporting by Johannes Hellstrom; Editing by Erica