STOCKHOLM -- Volvo Car Group reported a 11 percent rise in first-quarter operating profit on Friday as strong demand for its XC60 and 90-series cars gave it a boost, and the automaker stuck to a forecast of higher sales this year.
Volvo, which was bought by China's Zhejiang Geely Holding Group Co. from Ford Motor Co. in 2010, said in a statement that earnings rose to 3.5 billion Swedish crowns ($396 million) from 3.1 billion in the previous year.
Volvo's sales rose to 47.6 billion crowns from 42 billion a year ago while its operating margin inched down to 7.3 percent from 7.5 percent.
Higher demand for the new XC60, which went on sale in March in Europe, and the outgoing model gave Volvo a boost. Volvo will start taking orders for the model in the U.S. in mid-June. Deliveries will begin in the fall.
Volvo said launch costs for the 90 series cars and the XC60, as well as investments in new technologies and hiring new staff, had hit quarterly profit, but despite this, CEO Hakan Samuelsson stuck to a positive forecast for the rest of the year.
"We also unveiled the new XC60 in the first quarter and we expect this car to have a positive impact on sales and profitability," Samuelsson said.
The automaker has invested in new models and plants to secure a niche in the premium auto market dominated by Mercedes-Benz and BMW.
Volvo said it had sold 129,148 cars in the quarter globally, an increase of 7 percent, with sales in China up 19 percent and a rise in the EMEA region of 9 percent.
In the U.S., Volvo's sales fell 18 percent, affected by a move to centrally distribute its 90-series cars to all markets.
"While low financing rates and a solid economy continue to support sales, rising interest rates and falling used-vehicle prices threaten further U.S. auto market growth in 2017 after the record auto sales high in 2016," Volvo said.
Last year, Volvo took steps toward an eventual listing, raising 5 billion crowns from Swedish institutional investors through the sale of newly issued preference shares.
The company reported record high sales of 534,332 cars in 2016. One of Sweden's largest companies by sales and number of employees, Volvo has set an annual sales goal of 800,000 cars in the medium term.