Stick one hand in a bucket of liquid nitrogen and barbecue the other. On average, you should feel all right. Or you could just ask Volvo (NASDAQ:VOLV) how it feels. The truck maker is stuck between some serious hot and cold right now.
First the hot: European truckers can't get enough Renault and Volvo trucks, so the company is working on new manufacturing plants to meet the demand. Margins in Europe, South America, and "large parts of Asia" are fat because those are sellers' markets right now.
Then the cold: The North American market is suffering from the Mack unit's labor union negotiations, a weakening dollar that shaves value off of the Swedish company's transatlantic profits, and low demand for new trucks with the new and tighter truck emissions regulations. Compliant engines for heavy-duty trucks cost on the order of $7,000 more than the old-standard parts did.
The labor situation is essentially the same thing that automakers Ford (NYSE:F) and General Motors (NYSE:GM) recently had to deal with -- renegotiations of expired pacts.
So is Volvo feeling OK between these extremes? Yes indeed. While this quarter's earnings came in a bit lower than hoped for by the Swedish analyst flock, sales were a positive surprise and the order book is full. And management thinks the North American weakness is more than balanced by strength in Asia and Eastern Europe, so the future looks better than lukewarm.
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