Volvo Cars says supply chain woes remain as profit lags forecasts

Volvo Cars says supply chain woes remain as profit lags forecasts

The logo of Volvo is seen on the front grill of a Volvo XC40 SUV displayed at a Volvo showroom in Mexico City, Mexico April 6, 2018. REUTERS/Gustavo Graf

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STOCKHOLM, Feb 11 (Reuters) – Volvo Cars (VOLCARb.ST) posted on Friday earnings below analysts’ expectations pressured by the lingering global supply shortages, while demand for its products remained strong.

The Gothenburg-based carmaker, which listed on Nasdaq Stockholm in October, said it expected to continue growing sales volume in 2022, though uncertainty due to the lingering effects of the pandemic was still high.

Volvo and other global car makers have been forced to cut vehicle output, despite robust demand in key markets like China and the United States, due to a global chip shortage.

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“While the component shortage has eased somewhat, the supply chain is expected to remain a restraining factor,” the Swedish company said in a statement.

Volvo’s fourth-quarter operating profit fell to 3.7 billion Swedish crowns ($396.4 million) from 4.9 billion a year ago, compared to a 4.77 billion mean forecast in a Refinitiv poll.

The company’s full-year operating margin rose to 7.2% from 3.2% in 2020, and versus 5.2% in 2019, before the coronavirus pandemic struck.

Volvo, majority owned by China’s Geely Holding (GEELY.UL), proposed that no dividend would be paid.

($1 = 9.3353 Swedish crowns)

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Reporting by Helena Soderpalm; Editing by Simon Johnson

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