Volvo Cars set records for full-year revenue and profitability despite posting fourth-quarter earnings below expectations because of the semiconductor shortage and higher raw materials prices.
Its fourth-quarter operating profit fell to 3.7 billion Swedish crowns ($396.4 million) from 4.9 billion a year earlier. Revenue fell 6 percent to 80.1 billion crowns in the quarter, the company said in a statement.
The automaker, which listed on Nasdaq Stockholm in October, was also hit by accounting changes at EV maker Polestar, in which it owns a 49 percent stake, as well as high investment costs from expanding the subsidiary’s lineup.
Polestar’s midterm plan includes boosting sales to 290,000 by 2025 from 29,000 last year.
As a result, Volvo fourth-quarter operating margin was 4.6 percent, down from 5.8 percent for the same period in 2020.
Volvo said its margin would have been 7.1 percent during the quarter “excluding share of income from joint ventures and associates.”
The automaker’s retail sales also decreased 20 percent to 168,000 in the quarter, but Volvo was able to offset the impact of that decline.
“We compensated for the volume drop with cost increases resulting from price and mix improvements,” Volvo Chief Financial Officer Bjorn Annwall told Automotive News Europe. “Overall, we had a strong performance despite a very volatile environment.”
Volvo’s full-year revenue of 282 billion crowns ($30.3 billion) was a record as was its 2021 operating margin of 7.2 percent, up from 3.2 percent in 2020 and 5.2 percent in 2019, before the pandemic struck.
Volvo reported full-year earnings of 20.3 billion crowns ($2.2 billion).
Looking ahead, Volvo said Friday is expects to boost sales in 2022, but Annwall fears the chip crunch will have a lingering impact.
“We see gradual improvement, but it’s slow,” he said. “We believe it’s going to be a major restraining factor in H1. Then let’s see what happens in H2.”
When asked whether Volvo will reach its coveted goal of 800,000 global sales in 2022, two years later than planned, he said: “We definitely have the demand for it and we have an order book for it, but let’s see how much we can deliver based on the supply chain constraints.”
Reuters contributed
