Truck maker Volvo warns of lingering supply strains

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Quarterly operating profit increased almost 21%


The result was slightly below analysts’ expectations


Shares down 3%

Jan 26 (Reuters) – Swedish truck maker AB Volvo’s supply chain struggles will continue, it said on Thursday after reporting a headline fourth-quarter profit close to analysts’ expectations .

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

The Swedish company’s fourth-quarter adjusted operating profit rose nearly 21% to 12.2 billion Swedish crowns ($1.19 billion) against an average forecast of 12.5 billion crowns in a survey of analysts by Refinitiv, but the 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.

“Therefore we will continue to have disruptions, stoppages and extra costs in the production of trucks and in other parts of the group,” said his statement.

Volvo continued to financially support its suppliers in the fourth quarter due to the ongoing energy crisis in Europe, after starting to provide help in the previous quarter, finance chief Tina Hultkvist said on a call in conference.

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

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

Like its German peers, Volvo said it also had to restrict new order bookings in the past three months.

Lundstedt, however, said Volvo reopened its order book for both Europe and North America in the first quarter, with new orders coming in.

The group repeated its October outlook for unchanged enrollments next year.

Shares in Volvo, the world’s second-biggest truck maker with brands including Mack and Renault, were down 3% at 1028 GMT.

Volvo proposed an ordinary annual dividend of 7 crowns per share and an extra dividend of the same amount. ($1 = 10.1895 Swedish crowns) (Reporting by Marie Mannes Editing by Anna Ringstrom and David Goodman)

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