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AB Volvo logs profit jump but warns of higher costs, supply disruptions

Published 10/20/2022, 01:41 AM
Updated 10/20/2022, 03:31 AM
© Reuters. FILE PHOTO: Volvo trucks are seen for sale in Linden, New Jersey, U.S., May 23, 2022. REUTERS/Andrew Kelly

By Marie Mannes

(Reuters) -Swedish truck maker AB Volvo said third-quarter core earnings climbed 26% as ageing fleets were replaced in Europe, but warned it would be challenged by sharp increases in energy and material costs as well as supply disruptions.

Shares in the company fell 3% in early trade.

Volvo said rising energy prices had put its supplier base under financial pressure. At the same time, it is also grappling with a global shortage of semiconductors and other components as well as difficulties in shipping its trucks to customers due to lack of drivers.

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

Adjusted operating profit at the Gothenburg-based manufacturer of trucks, construction equipment, buses and engines, jumped to 11.87 billion Swedish crowns, in line with analysts' forecasts.

Revenue shot 35% higher to 114.9 billion crowns.

Net orders for trucks, sold under brands such as Mack and Renault (EPA:RENA) as well as its own name, rose 27% to 64,700 vehicles. Pent-up demand to replace ageing fleets in Europe offset a decline in sales in North America.

© Reuters. FILE PHOTO: Volvo trucks are seen for sale in Linden, New Jersey, U.S., May 23, 2022. REUTERS/Andrew Kelly

Currency effects had a positive impact of 2.42 billion crowns.

Volvo kept its 2022 forecasts for truck registrations in Europe and North America unchanged at 300,000 for both regions. It also said it expects both regions to log 300,000 registrations next year.

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