While overall sales increased, Volvo sold fewer vehicles in key markets in Europe and the US.
Swedish carmaker Volvo Cars on Thursday raised raw material costs and inflation dented profits in the third quarter.
The group posted a net profit 665 million kronor ($61 million) for the July-September period, down 71% from 2.3 billion kronor in the same quarter a year ago.
This is much lower than analysts’ forecasts of 2.15 billion to 2.19 billion kronor, according to Bloomberg and FactSet.
Of the company stock price fell about seven percent in midday trading on the Stockholm stock exchange.
Chief Executive Officer Jim Rowan said the company was hit hard by rising raw material prices, record inflation, higher interest rates and the war in Ukraine.
“Macroeconomic uncertainties around the world impacted our third quarter results,” he said in a statement.
Revenue meanwhile rose slightly above analyst expectations, up 30% to 79.3 billion kronor, boosted by “strong” demand for the company’s SUVs.
Analysts had predicted sales for the third quarter of between 78.1 and 78.7 billion kronor.
However, retail sales were down in several markets, including the main markets of Europe and the United States, where vehicle sales fell 14% and 32% respectively.
However, the automaker insists that its order book remains stable.
Volvo Cars, which aims to have an all-electric fleet by 2030, also reported “strong growth” for all-electric vehicles at the end of the quarter, especially in September. .
It said sales of all-electric cars grew 87% in the third quarter, accounting for 7% of total sales for the period.
The company, a subsidiary of China’s Geely group, said manufacturing output continued to improve in the third quarter, but “unforeseen factors” such as power cut and COVID-19-related lockdowns in China have “slowed the pace of normalization”.
It projects manufacturing, wholesale and retail growth in the second half of the year.
“For the full year of 2022, we expect wholesale volumes to be slightly lower than in 2021, assuming no further major disruptions in the supply chain. Wholesale and retail volumes will be around the same level. self,” it said.
© 2022 AFP
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