AB Volvo warns chip woes to linger after slender revenue miss By Reuters

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© Reuters. FILE PHOTO: The logo of the Swedish truck manufacturer Volvo is pictured at the IAA truck fair in Hanover on September 22, 2016. REUTERS / Fabian Bimmer

From Niklas Pollard

STOCKHOLM (Reuters) – Sweden’s AB Volvo on Tuesday warned of further production disruptions and downtimes this year after chip shortages prevented the truck maker from taking full advantage of strong demand for its vehicles in the second quarter.

The truck, construction equipment, bus and engine manufacturer’s operating profit tripled from $ 3.27 billion.

A global shortage of semiconductors, just as the market roared again after last year’s pandemic slump, has put heavy truck and smaller vehicle manufacturers under pressure, squeezing production, extending lead times and increasing costs.

Volvo, a rival of Daimler (OTC 🙂 and Traton from Germany, struggled with production losses of almost a month in the second quarter.

And although the group recovered strongly, reported sales and adjusted earnings of the group remained below the cyclically high level reached in the same period of 2019 before the outbreak of the pandemic.

“In the second half of the year there will be further malfunctions and failures in truck production as well as in other parts of the group,” said CEO Martin Lundstedt in a statement.

Lundstedt said on a conference call that Volvo would try to increase capacity in the second half of the year, but component supply would set the limits. Volvo shares were down 3.9% to 0822 GMT.

“Volvo has printed good results that are slightly below street estimates,” said JPMorgan (NYSE 🙂 analysts in a research note.

“Given the limited transparency in the supply chain and the semiconductor scarcity that is still affecting the industry (in the second half of the year), we expect limited movement in consensus expectations.”

Meanwhile, the demand for heavy trucks is strong with a surge in online shopping due to the pandemic, which is increasing freight volumes and rates, and is encouraging fleet operators to continue placing vehicle orders that were suspended after the virus first broke out.

Volvo said order bookings of its trucks, which are also under brands like Mack and. sold Renault (PA :), up 143% from a weak quarter of the previous year and stuck to the forecasts for solid market growth in Europe and North America this year.

The company also raised its 2021 outlook for construction equipment markets in both regions.

($ 1 = 8.6971 Swedish crowns)

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