Volvo Cars Earnings Surpass Forecast over Robust Demand amid Chip Shortage

On Thursday, luxury automaker Volvo Cars revealed that the demand for their products remained sturdy despite the global chip scarcity, even as shortages continues to ease. This comes after the company’s revenue exceeded forecasts and analyst expectations.

Volvo’s Chief Financial Officer Bjorn Annwall said to Reuters, "So far those price increases have come through and it hasn't dampened demand at all."

This comes after a global shortage in semiconductor supply stemming from the ongoing COVID-19 pandemic, caused carmakers to slash output despite climbing demand. Additionally, the Ukraine-Russia crisis has also led to a spike in costs of raw materials, shipments, and energy which Volvo intends to minimize by modifying prices. However, the company did warn that its output had slumped towards the end of the first quarter due to a brief scarcity in semiconductors, with the supply shortage likely to bleed into the second quarter.

Volvo’s Q1 operating income plunged to 6 billion Swedish crowns ($607.4 million) from 8.4 billion Swedish crowns a year ago. However, quarterly earnings surged by 8% to 74.3 billion crowns, surpassing analysts’ forecast of 71.15 billion crowns, reported Reuters.

©Photo: Reuters