Truck maker Volvo cuts North America truck market outlook amid tariff uncertainty

By Agata Rybska and Jesus Calero

(Reuters) -Truck maker Volvo lowered its North America market outlook on Wednesday, pointing to increased uncertainty around tariffs and their impact on global trade, as it reported a bigger-than-expected fall in first-quarter profit.

The Swedish group said it now sees the North American heavy truck market at 275,000 new vehicles this year. Its previous forecast, from January, was for 300,000. 

Volvo repeated a market outlook for 290,000 new heavy trucks in Europe, adding however that current market conditions meant forecasts were subject to significant uncertainty.

U.S. President Donald Trump this month announced sweeping tariffs on goods' imports fuelling concern about the impact on the global economy.

Truck makers have been signalling a slowdown in the North American market although some analysts have pointed to signs of orders picking up momentum in Europe.

"The divergence in trends between the U.S. and Europe is becoming more evident," Bernstein analyst Harry Martin said in a note, adding that the European truck order intake grew 25% in the quarter, while U.S. orders expanded well below the quarter's deliveries.

CEO Martin Lundstedt said uncertainty around trade tariffs and emissions legislation had prompted U.S. customers to adopt a wait and see approach. 

He said it was too early to assess the full implications from the imposed tariffs and their impact on demand, but that Volvo was working to adapt production capacity and commercial terms to mitigate the effects. 

Volvo said on Friday it would lay off as many as 800 workers at three U.S. facilities over the next three months due to the market uncertainty. 

Volvo is better positioned than some of its peers because its trucks business has a complete U.S.-based production chain.

Lundstedt underlined this in an analyst call, but said the tariffs could still make an impact.

Operating profit was 13.3 billion crowns ($1.39 billion) against a year-earlier 18.2 billion and a mean forecast in an LSEG poll of analysts of 14.8 billion. 

Shares in Volvo fell 1.7% in early trade, but reversed course and were trading up around 1.6% at 0903 GMT.

($1 = 9.5533 Swedish crowns)

(Reporting by Agata Rybska, Jesus Calero; Editing by Anna Ringstrom and Kate Mayberry)