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Home Finance

Volvo Cars profits rise, but it sees ‘big risk’ from semiconductor shortage

February 4, 2021
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Volvo Cars profits rise, but it sees ‘big risk’ from semiconductor shortage
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STOCKHOLM — Volvo Cars has not suffered from the global semiconductor shortage, but risks linger, its chief executive said on Thursday as the Sweden-based company reported an 8.2% rise in second-half operating earnings.

Volvo, has seen a sharp rebound boosted by growing demand for electric cars, but several automakers have been forced to cut production lately, due to semiconductor shortages.

CEO Hakan Samuelsson said the company, which is owned by China’s Geely Holding, had not seen any lost volume due to the shortage, adding the next four weeks had been secured.

“So short-term no disturbance. … But there is of course a big risk that it could come here during the first quarter. But it is very hard to forecast,” Samuelsson told Reuters.

Gothenburg, Sweden-based Volvo said on Thursday it expected increased sales this year and a return to pre-pandemic levels of profitability, assuming market conditions continue to normalise.

The auto industry was hit hard last spring due to widespread lockdowns in many markets.

One bright spot in the second half of the year for Volvo was electric vehicles, with their share of Volvo‘s sales more than doubling and reaching over 30% of total sales in Europe.

Volvo aims to have fully electric cars account for 50% of its global sales by 2025, with the rest to be hybrids.

Talks on a potential merger with sister company Geely Automobile are still on hold as Geely works to list its shares on Shanghai’s New Star Market, Samuelsson said, adding he expected to come back with further details in the first quarter.

Volvo Cars reported second-half (July-December) operating earnings of 9.50 billion Swedish crowns ($1.1 billion) versus 8.78 billion a year earlier.

It said last month that full-year sales dropped 6% to 661,713 cars while sales in the second half were the strongest in the firm’s history.

In January, its global sales rose by 30.2% to 59,588 cars, the firm said on Wednesday.

Truckmaker Volvo profit beats forecast, sets shareholder payout

STOCKHOLM — Swedish truckmaker AB Volvo reported fourth-quarter core earnings well above analysts’ expectations on Wednesday, raised its forecasts for some of its main markets and rolled out a hefty shareholder payout amid a broad recovery in demand.

But Volvo also cautioned that the rebound, along with a global chip shortage, had left its supply chain under pressure which would lead to production disturbances and higher costs at least during the current quarter.

Adjusted operating profit at the maker of trucks, construction equipment, buses and engines rose to 10.93 billion Swedish crowns ($1.30 billion) from 9.22 billion a year earlier, above the 8.77 billion seen by analysts according to Refinitiv data.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets, which has improved the confidence in the future among our customers,” Volvo Chief Executive Martin Lundstedt said in a statement.

Order intake at Volvo, which rivals Germany’s Daimler and Traton, amounted to 86,069 trucks, up 61% from the year-ago quarter on the back of a broad recovery.

The company, which abandoned plans to pay annual and extra dividends last year as the first wave of the COVID-19 pandemic struck but still retained a vast cash pile, said it would make a total shareholder payout of 15 crowns per share for 2020.

 
 
   
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