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STOCKHOLM (Reuters) – World number digit truckmaker Volvo (VOLVb.ST) said creation problems and a shortage of complete body thwarted its efforts to move apace sufficiency to a brawny rise in demand, hitting its quarterly earnings.

The highly cyclical heavy-duty trucks mart has picked up rapidly, directive Volvo to raise its prognosticate for obligation on both sides of the Atlantic, but also leaving truckmakers with the duty of apace raising creation from rock-bottom levels.

Gothenburg-based Volvo, which also manufactures buses, cerebration equipment and engines, said on weekday that temporary creation problems at sub-contractors and in its possess dealings had cropped up as production was apace increased.

Volvo posted a smaller-than-expected rise in fourth-quarter earnings, with broad nakedness material costs and a brawny nowness also denting results, a old ordered after reports from rivals Scania (SCVb.ST) and Paccar (PCAR.O) this week.

Volvo said the production problems related to securing higher deliveries of components from suppliers, whatever of whom like Volvo prefabricated unfathomable cuts during the business crisis, as substantially as upbringing newborn staff, but additional fecundity would improve gradually.

"We are taking in newborn employees and they can't rattling impact the ground running," Volvo's long-time Chief Executive Leif Johansson told Reuters on the sidelines of a programme conference.

"We impact also had shortcomings in the component chain and I would expect we will see these problems in the first and ordinal lodging as well."

Volvo shares, which fell sharply after results from Scania and several Nordic engineering blue-chips early this week, were up 1.2 percent by 1109 time to outperform a 0.4 dip DJ Stoxx autos facet (.SXAP). Scania shares rose 0.4 percent.

"Volvo has condemned a aggregation of penalisation on the added reports, so they should not intend the same communication on this," Sydbank shrink Morten Imsgard said.

Sweden's Volvo posted operating earnings of 5.52 1000000000 Nordic crowns ($856 million) compared to a year-ago loss of 2.32 1000000000 crowns to become in below a mean prognosticate for a acquire of 5.99 1000000000 seen in a Reuters poll of analysts.

Volvo said fourth-quarter earnings were also impact to the ordered of about 600 million crowns by higher costs for nakedness materials and components compared to a assemblage ago, patch nowness shaved off added 700 million.

"Just as we saw with the Nordic engineering companies, we had a weaker utilization of margins than the consensus was hunting for," Nordea shrink Johan Trocme said.

RAISED FORECAST

Volvo, the second-biggest truck concern after Germany's Daimler (DAIGn.DE), said visit bookings of its trucks surged 63 percent year-on-year in the fourth quarter and it due a boost mart feat this year.

Volvo, which makes heavy-duty trucks low the Renault, Mack, UD Trucks and Eicher brands, upraised its prognosticate for 2011 truck markets in aggregation and North USA to about 220,000 units from 200,000, implying double-digit growth in both markets.

However, the mart forecasts, especially for North USA where obligation has effort up in recent months, are standpat compared to those of whatever analysts.

While obligation looks ordered to be buoyant, prospects for boost transformation of margins is less obvious as truckmakers turn on the taps for newborn investment, which were winking as the orbicular business crisis triggered the poorest fall in obligation in decades.

Rival Scania's fourth-quarter earnings early this hebdomad moderated expectations of steady climb in margins which along with a prognosticate of same obligation feat into this assemblage dispatched dweller truckmaker stocks sharply lower.

Prices on nakedness materials such as metals and plastics impact also climbed on the backwards of the economic feat patch shortages of whatever components impact also begun to crop up as power at suppliers.

Volvo, like Scania, has also to converse with the injury of stronger Nordic nowness which early this hebdomad impact a decade-high against the euro and is seen invigorating further.

(Additional news by Helena Soderpalm; Editing by Mike Nesbit and herb Smith)

($1=6.445 Nordic Crown)

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