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Business & Finance

Volvo braces for semiconductor shortage as earnings rise

  • Net profit rose to 8.8 billion Swedish kronor ($1.05 billion, 874 million euros), up from 4.67 billion a year earlier and beating analyst expectations.
Published April 22, 2021

STOCKHOLM: Swedish truckmaker Volvo Group posted higher first quarter earnings on Thursday, but warned production could be hampered by the global semiconductor shortage.

During the same period last year, the company started feeling the impact of the Covid-19 pandemic, before seeing a gradual recovery in the second half of the year.

"The first quarter of 2021 was characterised by high activity among our customers, which was reflected in good demand for both new products and services," CEO Martin Lundstedt said in a statement.

Net profit rose to 8.8 billion Swedish kronor ($1.05 billion, 874 million euros), up from 4.67 billion a year earlier and beating analyst expectations.

Operating margin also improved to the "historically high" 12.6 percent.

In the early hours of trading on the Stockholm stock exchange, shares in Volvo were up over three percent.

Going into the second quarter, the truckmaker expects production stops of two to four weeks due to the ongoing shortage of semiconductors.

In contrast, it only had "limited impact" in the first quarter.

"The global supply chain for semiconductors as well as for other components remains very unstable and uncertainty about the development is high," Lundstedt said.

"We can therefore not rule out further disruptions both in the truck business and in other parts of the group," he continued.

Several carmakers have warned in recent weeks about the impact on their production from the shortage of semiconductors, linked in particular to strong demand for consumer electronics, which is the priority for manufacturers.

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