Sweden's Volvo today posted a much bigger than expected rise in first-quarter core earnings as robust demand and years of cost trimming bolstered turnover and profitability at the truck maker. 

Gothenburg-based Volvo also raised its forecast for long-depressed demand for construction equipment in China.

But it left unchanged its outlook for truck markets on both sides of the North Atlantic. 

Volvo has begun reaping the dividends of a now completed cost cutting drive to boost margins and improve flexibility across the sprawling group. 

Shares in Sweden's biggest company by revenues have risen 26%.

Volvo said today that adjusted operating profit rose to 7.03 billion Swedish crowns ($793m) in the first quarter from 4.46 billion a year earlier, beating the mean forecast of 5.32 billion in a poll of analysts. 

Volvo's construction equipment arm, which has weathered years of soft demand and accounts for a fifth of group turnover, provided much of the earnings surprise as sales volumes picked up.

The company also managed to keep a lid on operating expenses and cut material costs.

Stronger profitability at the maker of trucks, construction vehicles, buses and engines saw its adjusted operating margin rise to 9.1% compared to 6.2% a year earlier and the 7% seen by analysts, with profit increases coming through in all its business areas. 

Volvo, whose brands includes Mack, Renault and UD Trucks as well as its namesake vehicles, said order intake of its trucks rose 11% year-on-year in the first quarter, topping the 7% rise seen by analysts. 

After reaching their highest since the global financial crisis last year, European truck sales have held up in early 2017, while soft demand in North America has shown signs of improvement.

"After the downwards correction in the long haulage segment in 2016, the North American market seems to be bottoming out. We see positive signs of increased order activity," the company's chief executive Martin Lundstedt. 

Robust demand is also helping Volvo's rivals, with Daimler beating quarterly earnings forecasts this month. 

Demand for construction equipment in China has also begun picking up. Volvo raised its growth outlook for that market to 20-30% this year from 5-15% previously.