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AB Volvo Warns of Lingering Supply Strains

  • Quarterly operating profit up almost 21%
  • Result was slightly below analyst expectations
  • Shares down 4%

Jan 26 (Reuters) - Swedish truck maker AB Volvo's supply chain struggles are set to linger, it said on Thursday after reporting fourth-quarter core profit close to analyst expectations and proposing an extra dividend.

Volvo and rivals such as Germany's Daimler Trucks have struggled with a global shortage of crucial components such as semiconductors, broader supply chain issues and strained freight capacity resulting from the COVID-19 pandemic and Russia's war on Ukraine.

The Swedish company's adjusted fourth-quarter operating profit rose almost 21% to 12.2 billion Swedish crowns ($1.19 billion) against an average forecast of 12.5 billion crowns in a Refinitiv poll of analysts, but Chief Executive Martin Lundstedt said the business continues to be affected by a volatile supply chain for components.

Lundstedt also highlighted pressures on Volvo's supplier base from high energy prices and input costs.

"We will therefore continue to have disturbances, stoppages and extra costs in the production of trucks and in other parts of the group," his statement said.

Supply issues have affected lead times, with soaring inflation and the energy crisis complicating matters.

Long lead times have hampered the whole sector. German truck maker Traton has had to restrict new orders despite selling 300,000 vehicles for the first time last year.

Volvo, which has also been forced to restrict new orders, repeated the outlook given in October for heavy truck registrations in Europe and North America to hit 300,000 in each region this year.

Shares in Volvo, the world's second-biggest truck manufacturer with brands including Mack and Renault, were down 4% in morning trade

Volvo proposed an ordinary annual dividend of 7.00 crowns per share and a extra dividend of the same amount.

($1 = 10.1895 Swedish crowns)

Reporting by Marie Mannes Editing by Anna Ringstrom and David Goodman

Source: Reuters


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