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April 28, 2022

Volvo Cars Q1 results hit by lower volume

Volvo Cars has posted Q1 results hit by lower volume, but there was considerable support from product mix and higher margins.

By David Leggett

Geely-owned Volvo Cars has reported first quarter results that show retail sales down 20% but revenue up 8% to leave EBIT at SEK 6.0bn, versus SEK 8.4bn last year.

The company described the results as ‘stable’ in the context of challenges in the market.

“In the first few months of 2022, the war in Ukraine has destroyed lives and displaced millions of innocent people. The same war has also sent already rising inflation to new heights and further disrupted supply chains that were already fragile,” said Jim Rowan, chief executive of Volvo Cars. “When summarizing Volvo Cars’ performance during this first quarter, I am incredibly pleased that we have delivered such stable results.”

The interim report for the first quarter shows that Volvo Cars’ revenue amounted to SEK 74.3 bn, up from SEK 68.6 bn the same period last year.

Volvo Cars sold a total of 148,295 cars in the first quarter (-20%) as the supply chain constraints affecting the company continued to slowly ease. However, late in the quarter the company was hit by a shortage of a specific component (an electronic chip) which will also impact production during the second quarter. Volvo Cars said it considers this a temporary setback and expects the supply chains to improve in the second half of the year. The company expects marginal growth in sales volumes for the full year 2022, compared to 2021, although uncertainty is high.

Volvo Cars’ plug-in hybrid and fully electric Recharge models remain popular among customers and the share of electrified cars continued to rise. In the first quarter, Recharge sales made up 34 per cent of total sales, whereof fully electric cars made up 8 per cent doubling in the space of the last two quarters. That share will continue to grow as Volvo increases its annual production capacity of fully electric cars to 150,000 units after summer.

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