World number two truck maker Volvo posted a deeper than expected second-quarter loss on Tuesday and stood by its forecast that the economic downturn would see its main markets shrivel this year.
But the drain of cash from the group slowed considerably in the quarter compared with the previous three months while the Swedish vehicles maker said it had managed to cut inventories further as it adjusted to the plunging demand, Reuters reports.
The company, which is no longer related to the car manufacturer of the same name and logo, earned 5.15 billion krona in the year-earlier period.
Volvo, which trails only Daimler /quotes/comstock/13*!dai /quotes/nls/dai ( DAI 42.68 , +1.68 , +4.10% ) in truck sales, said it was hurt by a 57% drop in truck deliveries as well as increased provisions for credit losses and costs associated with a UAW agreement on retiree health benefits.
But the company did note that orders are up 32% from first-quarter levels.
"We see that the decline in demand has started to level off and that the markets have stabilized, even though it is still difficult to predict the rest of the year," said CEO and President Leif Johansson in a statement, MarketWatch reports.
“We have a difficult quarter also ahead of us regarding earnings, as we reduce production additionally through extended vacation closure aimed at further reducing inventory of new products,” Johansson said in the statement. “Until we have our inventories and costs in balance with market demand, we will continue to have low absorption of our costs, which negatively affects profitability.” , Bloomberg reports.