Volvo has beaten analysts’ predictions as a result of strong demand and supply chain issues improving, the automotive maker announced today.
In the first quarter of 2022, Volvo’s profits slumped by 40 per cent, going down to 6bn Swedish crowns (£488.9m) from 8.4bn a year earlier. Nevertheless, earnings beat the 4.13bn expected by analysts polled by Refinitiv.
Even though the manufacturer was forced to hike prices due to a war-induced increase in costs for raw material and freight, Volvo reported that a strong demand continued to drive its returns.
In the last three months, revenues went up to 74.3bn crowns, topping the 71.15bn expected by analysts.
“So far those price increases have come through and it hasn’t dampened demand at all,” Volvo’s chief financial officer Bjorn Annwall told Reuters.
But according to a JP Morgan note, higher costs are expected to fully impact the company in the second half of the year as a result of supply chain concerns and raw material cost management becoming key issues.
Volvo’s results follow that of Mercedes-Benz, whose boom in demand has allowed it to offset rising material and transport costs, City A.M. reported.