AB Volvo warns chip woes to linger right after slim financial gain miss

The brand of Swedish truck maker Volvo is pictured at the IAA truck present in

The brand of Swedish truck maker Volvo is pictured at the IAA truck present in Hanover, September 22, 2016. REUTERS/Fabian Bimmer

  • Desire increase spurs orders, strains offer chain
  • Semiconductor lack hitting output
  • CEO sees a lot more creation stoppages in H2
  • Shares down 3.9%

STOCKHOLM, July 20 (Reuters) – Sweden’s AB Volvo (VOLVb.ST) warned on Tuesday of additional manufacturing disruptions and stoppages this 12 months soon after chip shortages prevented the truck maker from entirely capitalising on sturdy demand from customers for its automobiles in the next quarter.

Functioning income at the maker of vans, design equipment, buses and engines nearly tripled to 9.73 billion Swedish crowns ($1.12 billion) from 3.27 billion a 12 months back, but a little skipped the 9.84 billion observed by analysts according to Refinitiv knowledge.

A international scarcity of semiconductors just as the industry roared back again following past year’s pandemic plunge has squeezed makers of hefty-duty vans as properly as smaller autos, crimping manufacturing, extending lead situations and lifting expenditures.

Volvo, a rival of Germany’s Daimler (DAIGn.DE) and Traton (8TRA.DE), explained it struggled with manufacturing stoppages of close to a thirty day period in the second quarter.

And while recovering strongly, the group’s noted profits and altered earnings remained down below cyclically-large concentrations achieved more than the identical period of time in 2019, just before the pandemic hit.

“There will be even more disruptions and stoppages in both truck creation and other parts of the group in the next 50 percent of the yr,” CEO Martin Lundstedt stated in a assertion.

Lundstedt stated on a meeting call that Volvo would seek to increase capability in the 2nd 50 percent, but cautioned materials of factors would established the restrictions. Volvo shares had been down 3.9% by 0822 GMT.

“Volvo printed a excellent established of final results, a little bit underneath road estimates,” analysts at JPMorgan claimed in a analysis note.

“With restricted visibility in the provide chain and semi-conductor shortages even now impacting the business (in the second fifty percent), we hope restricted motion in consensus anticipations.”

Meanwhile, need for weighty-responsibility trucks is potent with a surge in online searching thanks to the pandemic driving freight volumes and costs and emboldening fleet operators to shift ahead with vehicle orders suspended soon after the virus initial struck.

Volvo claimed buy bookings of its trucks, also offered below models these as Mack and Renault, soared 143% from a weak calendar year-ago quarter and stood by forecasts for reliable marketplace progress in equally Europe and North The usa this year.

The corporation also lifted its 2021 outlook for construction tools markets in both equally regions.

($1 = 8.6971 Swedish crowns)

Reporting by Niklas Pollard, enhancing by Tomasz Janowski and Jason Neely

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