Truck maker Volvo posts profit beat despite lingering supply chain issues

FILE PHOTO: Volvo trucks are seen for sale in Linden, New Jersey

STOCKHOLM (Reuters) -Sweden’s AB Volvo on Tuesday posted a bigger-than-expected rise in profit helped by strong demand for its trucks, but warned of continued supply chain issues.

A global shortage of components such as semiconductors and a lack of freight capacity have pressured truck makers after markets began to recover from the pandemic-induced demand slump.

The Gothenburg-based truck maker said it had successfully mitigated effects of supply chain disruptions and higher material costs through prices, adding that the situation for components was still unstable and unpredictable.

“We will therefore continue to have disruptions and stoppages both in the production of trucks and in other parts of the Group,” Volvo Chief Executive Martin Lundstedt said in a statement.

Adjusted operating profit at the maker of trucks, construction equipment, buses and engines rose to 13.75 billion Swedish crowns ($1.3 billion) from 9.73 billion a year ago, beating the 12.17 billion crowns seen by analysts in a Refinitiv poll.

Currency effects had a positive impact of 2.77 billion crowns year on year in the second quarter at the company, which competes with Germany’s Daimler Truck and Traton.

Volvo said orders for its trucks, sold under brands such as Mack and Renault as well as its own name, fell 8% year on year in the quarter. It kept unchanged forecasts for the European and North American truck markets.

Volvo said earlier this month that it had begun laying off some of its Russian staff and scaling down operations, but had not made a decision to leave the country entirely.

In February, it suspended all sales, service and production in Russia, which last year accounted for about 3% of net group sales.

($1 = 10.3932 Swedish crowns)

(Reporting by Helena Soderpalm; Editing by Kim Coghill, Kirsten Donovan)