September 28, 2022

Unitranche

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Volvo Cars has said the worst of the chip crisis that has hobbled the industry’s post-pandemic recovery may be over, though it warned of price rises as raw material costs bite.

The Swedish carmaker expects semiconductor shortages to continue for the first half but believes the impact on production is waning. The Gothenburg-based group on Friday posted record full-year profits of SKr14.2bn (£1.1bn) on sales of SKr699bn.

“I don’t think we’ll see a trend that gets worse,” chief executive Hakan Samuelsson told the Financial Times.

“The supply chain was a problem in the fourth quarter, but on the production side it was worse in the third quarter,” he added. “We are on the way to improving,” he added, but stopped short of predicting the issue will be fully resolved in the second half.

Shares in Volvo Cars dropped more than 4 per cent in early Stockholm trading on Friday.

Fourth-quarter profit fell 60 per cent to SKr2.3bn compared with the same period in the previous year, as chip shortages held back production, and Volvo’s Polestar business incurred accounting charges.

Even after chip shortages improve, the company will face higher raw material costs, leading to price rises.

“We are increasing pricing more than we normally would,” said chief financial officer Björn Annwall.

The business, which listed last year, said Samuelsson will retire next month. Former Dyson chief executive Jim Rowan is due to replace him.

The share of fully electric cars rose to 6 per cent in the fourth quarter, with production expected climb to an average of about 10 per cent over this coming year. The company has pledged to sell only electric models by 2030.