Geely's Volvo says sales, spending set to rise in 2018

STOCKHOLM (Reuters) - Geely-owned automaker Volvo Car Group reported a rise in quarterly operating earnings on Friday, on growth in the Chinese and U.S. markets and forecast higher sales, but also steeper spending, in the year ahead.

Swedish Volvo Cars, owned by Zhejiang Geely Holding Group, said operating earnings rose 3.6 percent to 3.62 billion crowns (299.33 million pounds) in the first quarter, boosted by an 18.9 percent rise in revenues to 56.81 billion crowns.

Volvo Cars, which has reported four straight years of record sales, said it expected unit sales as well as revenue to rise further in 2018, buoyed by new models and increasing sales of the XC40, its first compact SUV.

"Demand in the U.S. is strong and we have seen a continued good pick up in sales since last year," Volvo Cars CEO Hakan Samuelsson said in a statement. "China remains our biggest single market and our growth there continues."

The carmaker also said it expected full-year profits to "remain strong" due to an improving model mix, but cautioned that increased spending on marketing of new models and development of technology would take a toll.

The Swedish brand has made steady inroads into the premium automobiles market in the years since its 2010 purchase from Ford Motor Co <F.N>, seeking to take on larger rivals such as Daimler's <DAIGn.DE> Mercedes-Benz and BMW <BMWG.DE> with pricier high-end models.

While Geely helped breathe new life into Volvo, its recent purchase of a $9 billion stake in Germany's Daimler has sparked speculation about Chinese auto magnate Li Shufu's plans for the Swedish carmaker which has been seen as a likely IPO candidate.

In an article published in Swedish and German media this month, Li appeared intent on boosting cooperation among the companies in which it owns stakes, saying mutually beneficial partnerships should always be discussed.

(Reporting by Niklas Pollard; editing by Johannes Hellstrom and Biju Dwarakanath)