STOCKHOLM: Volvo Cars said on Thursday that 2023 is likely to be another challenging year despite healthy demand for its vehicles as the Swedish carmaker reported a fall in quarterly profit.

Volvo Cars, which is majority-owned by Chinese automotive company Geely Holding, said its fourth-quarter operating profit dropped to 3.4 billion crowns ($322.2 million)from 3.7 billion crowns a year ago.

“While 2023 looks to be another challenging year, we are hopeful that the COVID-related supply shortages from China are behind us and that we continue to see steady improvement in the supply of semiconductors,” it said in a statement.

“Despite the global turbulence, uncertainty and our recent price increases, we continue to see healthy demand for our cars,” Volvo Cars said, adding it expects a “solid” double-digit growth in retail sales during 2023.

Volvo Cars and its peers have faced lingering chip shortages over the past year that have periodically hit manufacturing with the Sweden-based company forced at times to halt production at some factories temporarily.

Geely plans to turn maker of London black cabs into EV powerhouse

Other supply chain issues, the energy crisis and red-hot inflation have also made the road more troublesome for the company.

The company once again proposed not paying out a dividend.