Volvo raises 2016 outlook after Q3 profit rise

STOCKHOLM -- Volvo Car Group reported a 62 percent rise in third quarter earnings, driven by strong demand for new pricier models that have lifted both sales and profitability, and raised its profit outlook for the full year.

Volvo, acquired by China's Zhejiang Geely Holding Group Co. from Ford Motor in 2010, said operating earnings rose to 2.07 billion Swedish crowns ($232.5 million) in the quarter from 1.28 billion a year ago.

Gothenburg-based Volvo, one of Sweden's biggest companies by sales and staff numbers, said it now expected a "substantial improvement" in profits for full year 2016 compared with a previous outlook for an "improvement" over last year.

Volvo, whose sales rose to 41.1 billion crowns from a year-ago 36.1 billion, is banking on a vast investment plan in new models and plants to carve out a firm foothold in a premium market where it struggled to make its mark under Ford ownership.

"With nine months of the year completed, I can state with confidence that Volvo Cars is on track for another record year in terms of sales," CEO Hakan Samuelsson said in a statement today.

Volvo, whose sales reached the half million mark last year as it looks to a goal of selling 800,000 cars by as early as 2020, said strong demand for its XC90 SUV, the first new model developed under Geely ownership, helped drive revenues.

The automaker said its operating margin was 5 percent in the quarter, a decline from the 6.7 percent reported in the first half as launch costs for its new S90 and V90 models weighed, but still higher that the year-ago 3.5 percent.