Volvo picks its construction equipment boss as new CEO

Swedish group Volvo, the world's number two truck maker, said the head of its construction equipment business was being promoted to group chief executive, in a widely anticipated move.

Volvo Construction Equipment chief Olof Persson had been seen as the front-runner to succeed long-time CEO Leif Johansson, who is set to become chairman of telecom gear maker Ericsson.

Persson, 46, takes the helm of Volvo as the truck maker is accelerating out of the worst market downturn in decades, as the global financial crisis pulled the plug on years of easy credit and booming demand. Volvo briefly fell into the red during the crisis and slashed thousands of jobs, but has since seen sales recover strongly as an upturn in emerging markets has triggered demand for commercial vehicles on both sides of the Atlantic.

"I think there was an ambition at the board to choose an internal candidate since Volvo has had a history of external CEOs," Handelsbanken analyst Hampus Engellau said.

"The negative aspect might be that he may have difficulty adopting an external perspective and carrying out large changes if needed since he has been at the company for quite some time."

"I don't see any major share price reaction from this. I see it as a consensus choice."

The Swedish truck maker said separately deliveries of its trucks rose 49 per cent year-on-year in February as the firm recovery in commercial vehicles demand continued in its main markets.

The outcome compared with a 62 per cent increase in the preceeding month, but the company is coming up against tougher comparisons from the year-ago months going through this year.

Volvo, which sells trucks under the Renault, Mack, UD Trucks and Eicher brands as well as its own name, said Persson would assume his new position on September 1 and would deputise for Johansson from May 1.

"During his time at Volvo Construction Equipment in the midst of the financial crisis, he (Persson) succeeded in restructuring the company and making it one of the most successful in its industry, in terms of both profitability and size," Volvo chairman Louis Schweitzer said.

Persson is a graduate economist who began his career at Swiss-Swedish engineering group ABB and he has also held executive positions at AdTranz and Bombardier.