Volvo Cars profit beats forecasts despite chip shortage

Automaker Volvo Cars said on Thursday that chip constraints were gradually improving after posting profits above forecasts as demand for its range of vehicles remained strong.

A global shortage of semiconductors has forced the Gothenburg-based carmaker and global peers to cut vehicle output despite robust demand from prospective car buyers, Reuters reports.

Volvo said production was down at the end of the first quarter due to a temporary shortage of a specific semiconductor and warned that supply problem was expected to remain in the second quarter.

The carmaker’s first-quarter operating profit fell to 6.0 billion Swedish crowns ($607.4 million) from 8.4 billion a year ago. Four analysts polled by Refinitiv had on average forecast of a 4.13 billion profit.

Volvo, majority owned by China’s Geely Holding, maintained its forecast for 2022 of marginal year-on-year growth in deliveries.

It said earlier this month that its car sales fell 20% in the first quarter to 148,295 cars.

Volvo in February suspended all sales, service and production in Russia, which last year accounted for about 3% of its net group sales.