Volvo braces for semiconductor shortage as earnings rise

STOCKHOLM (AFP) – Swedish truckmaker Volvo Group posted higher first quarter earnings yesterday, but warned production could be hampered by the global semiconductor shortage.

During the same period last year, the company started feeling the impact of the COVID-19 pandemic, before seeing a gradual recovery in the second half of the year.

“The first quarter of 2021 was characterised by high activity among our customers, which was reflected in good demand for both new products and services,” Chief Executive Officer Martin Lundstedt said in a statement.

Net profit rose to SEK8.8 billion, up from SEK4.67 billion a year earlier and beating analyst expectations.

Operating margin also improved to the “historically high” 12.6 per cent.

In the early hours of trading on the Stockholm stock exchange, shares in Volvo were up over three per cent.

Going into the second quarter, the truckmaker expects production stops of two to four weeks due to the ongoing shortage of semiconductors.

In contrast, it only had “limited impact” in the first quarter.

The Volvo logo in the lobby of the Volvo corporate headquarters in Brussels. PHOTO: AP