By Dominic Chopping

STOCKHOLM--Volvo AB (VOLV-B.SK) on Friday posted a forecast-beating 38% rise in third-quarter net profit and said it was still scrambling to meet surging demand for its trucks, particularly in North America, a problem it has been tackling for the past few quarters.

The Swedish truck maker said net profit for the period ended Sept. 30 was 7.46 billion Swedish kronor ($829 million) compared with SEK5.41 billion a year earlier, beating analysts' forecast SEK6.9 billion, according to a FactSet poll.

Sales rose 21% to SEK92.28 billion, nearly matching a consensus forecast of SEK92.27 billion. The group's operating margin grew to 11.1% from 9.1%, the company said.

"Together with our suppliers we continue to work hard to meet demand, reduce delivery times and improve delivery precision toward our customers," said Chief Executive Martin Lundstedt.

"However, given the strong demand, we expect the supply chain constraints, in particular in North America, to remain in the near-term."

Demand for trucks, it's biggest revenue driver, got a boost from high European transport activity and customer profitability, while in North America, a strong freight environment with high transport volumes and good freight rates has led to customers both renewing and expanding their fleets, it said. These trends are expected to continue into 2019.

Truck orders grew 26% to 65,348 units in the quarter while deliveries rose 14% to 52,993 trucks.

Volvo raised its full-year market forecast for heavy-duty trucks in Europe to 315,000 vehicles from a previous estimate of 310,000. The 2019 market is estimated at about 300,000 vehicles.

The North American market is still forecast at 300,000 heavy-duty trucks this year, while the projection for 2019 is for a market of about 310,000.

In China, demand for trucks has started to slow, and the 2019 market for heavy- and medium-duty trucks is projected at 1.15 million vehicles. The forecast for 2018 is still at 1.25 million trucks.

In Brazil, demand for new trucks has continued to increase as a consequence of a pent-up replacement need and favorable conditions in the agricultural segment. The heavy-duty truck market forecast has been increased to 50,000 units for 2018, from 45,000. For 2019, market demand is estimated at about 55,000 units.

Earlier this week Volvo said it found an emissions-control component fitted to some of its engines is prematurely degrading, potentially causing engines to exceed emissions limits for nitrogen oxides. The company didn't provide any new information in its report Friday as a full analysis of the issue is ongoing.

-Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter: @domchopping @WSJNordics

(END) Dow Jones Newswires

October 19, 2018 04:31 ET (08:31 GMT)

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