Supply chain issues impact Volvo's profits in final quarter of 2021
Volvo Cars announced its revenue hit a record last year, but due to global supply chain blockages, the automaker's sales and profits plummeted in the last quarter. Owned by Geely, the Sweden-based company mentioned a global shortage of semiconductors had worsened in the second half of 2021.
As per an AFP report, Volvo stated the result was a year of two halves. “During the first half, the market was up by double digits but abruptly stalled in the second half due to Covid-related shutdowns in South East Asia and other semiconductor-related production disturbances," said the company.
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The brand notified its retail sales dropped by 20 per cent to 1,68,000 units in the fourth quarter of the year, though revenue fell at a smaller rate that is by six per cent. Revenue fell to 80 billion kronor ($8.6 billion, 7.5 billion euros) compared to the same quarter in 2020 and the net profit shrank by 60 per cent to 2.3 billion kronor. The company added the overall picture was brighter for the entire year, with revenues jumping by seven per cent to 282 billion kronor. And, the net profit soared to 14.2 billion kronor, nearly double the 2020 figure.
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However, Volvo informed although the fall has been small, strong demand had a positive effect on prices and sales of more expensive cars while interest in electric vehicles continued to grow globally. The company has aimed to sell only fully electric models by 2030, said the share of sales of rechargeable vehicles, including plug-in hybrids, grew to 34 per cent in the fourth quarter.
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The Chief Executive Officer of Volvo Cars Hakan Samuelsson said last year was a year that the company is proud of. “Looking ahead, uncertainty is still high. While component shortage has eased somewhat, we expect the supply chain to remain a restraining factor," added Samuelsson.