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Volvo profit falls on chip shortages, Ukraine war
Automotive News

Volvo profit falls on chip shortages, Ukraine war

Eleanore Beatty April 28, 2022 Article

Volvo Vehicles mentioned chip constraints were step by step strengthening right after the automaker posted a fall in quarterly revenue irrespective of potent car or truck demand from customers.

Very first-quarter functioning revenue fell to 6 billion crowns ($607.4 million) from 8.4 billion a year in the past, the enterprise stated in a assertion Thursday. EBIT margin was 8.1 p.c, down from 12.3 p.c for the duration of the same interval last yr.

The change in the EBIT demonstrates two significant monetary on-offs in the initially quarter of 2021 that additional 3 billion crowns ($304.7 million) to the company’s guides, Volvo CFO Bjorn Annwall told Automotive Information Europe.

If those people were being excluded, the EBIT margin for the first 3 months of 2022 would have crushed the 2021 determine, he mentioned.

A world lack of semiconductors pressured Volvo to halt creation in the 1st quarter.

The automaker warned that the offer issue was expected to keep on in the 2nd quarter.

Volvo is also scrambling to protected sections from suppliers outside of China, exactly where significant COVID containment meaures have stymied industrial output, logistics and shipping across the vehicle sector.

“The lockdowns in China are serious and there is a big source foundation that is affected. Let’s see how long that lasts. If it continues for more time than it will affect the whole sector,” Annwall said, introducing the absence of twin sourcing for parts has international implications for light-weight-vehicle output.

Annwall said Volvo has witnessed positive indicators, like a far more reliable provide of chips, that indicate the shortage will enhance in the 2nd half.

“The semiconductor scarcity has clearly taken out a whole lot of quantity but the market has enhanced its pricing self-discipline owing to the scarcity of offer” to assistance offset the hit, he mentioned in an job interview.

That very same tactic is being made use of to reduce the financial hit triggered by larger prices for uncooked resources, vitality and freight for Volvo, Annwall stated.

Volvo, vast majority owned by China’s Geely Keeping, maintained its forecast for 2022 of marginal yr-on-yr advancement in deliveries.

The enterprise stated previously this month that its light-car revenue fell 20 per cent in the very first quarter to 148,295.

Volvo experienced hoped to be on observe to develop 900,000 vehicles this 12 months, or about 225,000 a quarter, but that aim was established in advance of the pandemic, the chip lack and the war in Ukraine.

Annwall said Volvo continues to target offering 1.2 million cars a yr by 2025.

Volvo in February suspended all profits, support and manufacturing in Russia, which past 12 months accounted for about 3 p.c of its internet team gross sales.

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Tags: Chip, falls, Profit, shortages, Ukraine, Volvo, War

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