STOCKHOLM (Reuters) -Volvo Cars on Friday posted earnings below expectations pressured by global supply shortages despite strong demand for its vehicles.
Profits at the carmaker, which listed on Nasdaq Stockholm in October, were also dented by raw material costs and accounting changes at electric vehicle (EV) venture Polestar, in which it owns a 49% stake.
The Gothenburg-based company and global peers have been forced to cut vehicle output, despite robust demand in key markets such as China and the United States, due to a global semiconductor chip shortage.
Volvo said the supply chain would remain a restraining factor, while the component shortage would only gradually improve.
“It will definitely continue in the first half of the year. I think it’s too early to say we will see a normalisation in the second half too,” long-time CEO Hakan Samuelsson, who is due to step down in March, told Reuters.
While some automakers have said chip shortages could ease in the second half of 2022, some chipmakers have warned that a recovery could take longer.
Volvo’s fourth-quarter operating profit fell to 3.7 billion Swedish crowns ($396.4 million) from 4.9 billion a year earlier and missed the 4.8 billion expected by analysts in a Refinitiv poll.
Quarterly revenue fell 6% to 80.1 billion crowns but topped the 75.2 billion expected by analysts. Volvo said it expected continued sales growth in 2022.
Volvo shares, down by 5% so far this year but up 39% from their IPO price through Thursday, fell 4.8% by 0940 GMT.
JP Morgan said it expected earnings downgrades “driven by the discussion on expenses incurred at Polestar”.
Volvo aims for 50% of its sales to be pure electric cars by the middle of this decade. In January, the proportion was 6.6%.
The company’s full-year operating margin rose to 7.2% from 3.2% in 2020 and 5.2% in 2019 before the pandemic struck.
Volvo, majority owned by China’s Geely Holding, proposed to pay no dividend.
($1 = 9.3353 Swedish crowns)
(Reporting by Helena Soderpalm; editing by Jason Neely and Elaine Hardcastle)
