Volvo profit beats despite supply-chain snarls

Bloomberg

Volvo AB said a slowing global economy is not yet weighing on demand as the truckmaker reported better-than-expected profit for the second quarter.
“We realise, like everyone else, that the macro-economic measures taken now by central banks must have an effect in order to reduce the inflationary pressures,” Volvo’s Chief Executive Officer Martin Lundstedt said in a phone interview Tuesday. “This will have an effect on consumption, the overall economy and the demand for transports — but we don’t see any of that in the figures yet.”
The world’s second-biggest truckmaker is still working to fill pent-up demand and has reduced taking on new orders to cut wait times and deal with inflation. While Volvo has faced extra costs related to supply-chain disruptions and raw materials, the manufacturer raised prices to mitigate those effects.
Adjusted operating profit for the three months through June came in at 13.75 billion kronor ($1.32 billion), the Swedish manufacturer said in a statement, beating the average analyst estimate of 12.5 billion kronor.
Net sales climbed 31% to 118.9 billion kronor amid good momentum in vehicle sales and the service business, the company said, adding that it continues to expect production issues due to the supply-chain snarls. While demand for Volvo’s trucks remained high, order intake fell 8% with strong new business in the US unable to offset restrictive order slotting in Europe.
“We’re not out of the woods yet,” Lundstedt said. “It’s not only a matter of chips, electronics and logistics. We still see bottlenecks in many places so we must stay vigilant.”
Volvo kept its 2022 outlook for most major markets even as it warned of low visibility because of the supply-chain issues, the ongoing pandemic and the war in Ukraine.
The manufacturer still sees the European and North American heavy-duty truck markets at 300,000 units each, and the Brazilian market at 100,000 vehicles. It cut its expectation for the Chinese heavy-duty truck market to 700,000 units from 880,000 units.