STOCKHOLM -- Volvo, the world's number two truck maker, reported lower than expected fourth- quarter profit on Tuesday, sending its shares lower, and said it would hive off its stake in rival Scania into a new company if it failed to sell it.
It also said Chairman Lars Ramqvist would step down with immediate effect and that he would be replaced by Finn Johnsson, the current head of Swedish firm Molnlycke Health Care.
Investors have expected the resignation of Ramqvist, who has been under a cloud since insurance group Skandia was criticed for handing out excessive bonuses to managers. Ramqvist was chairman of Skandia at the time and has since stepped down.
"Volvo's Nomination Committee has informed me that there are Swedish shareholders in Volvo -- specifically several of the Swedish institutional shareholders -- who lack continued confidence in me as chairman," Ramqvist said in a statement.
Volvo reported pre-tax profit of 1.6 billion crowns ($216.4 million), against a consensus forecast of 1.8 billion crowns in a Reuters poll and 737 million reported for the same period of 2002.
The company, which counts the United States as its second-biggest market after Europe, said its results were negatively affected by a weak dollar and one-off charges.
Sales rose to 48.7 billion crowns from 45.9 billion a year earlier, but were below an average forecast of 49.5 billion.
Volvo, which makes trucks, buses, engines for aeroplanes and boats and construction equipment, proposed a dividend of eight crowns per share.
"Construction equipment was worse than expected, as were the bus operations, while the trucks business actually did somewhat better than expected. All in all it's a mixed bag, but with a negative flavour," Evli Bank analyst Anders Berg said.
Volvo reiterated comments on the outlook for the European and North America markets.
"We assess that the truck market in Europe will remain at today's...level of 214,000 trucks, or increase somewhat during 2004," it said. "Customer activity rose in North America during the fourth quarter and there are expectations of an increase by 10 to 15 percent to a level of about 200,000 trucks."
The comments were in line with the views of Volvo's competitors DaimlerChrysler and Scania. The whole truck sector has seen a slowdown in demand on both sides of the Atlantic in the last three years.
Volvo said it was in talks with a number of potential buyers for its 45 percent stake and 30.6 percent of voting rights in Scania, which it acquired in a failed merger attempt in 2000.
European competition authorities have ruled that Volvo has until April 24 to sell the shares.
Volvo said that if the sale talks failed, it would transfer its Scania A-shares, which carry one vote each, to a new company called Ainax, which would be listed on the stock market, and would distribute Ainax stock to Volvo shareholders.