Volvo Group reported a Q1 record in truck sales despite ongoing supply chain disruptions. (Photo: Volvo Trucks North America)
Operating cash flow was negative SEK 5.4 billion because of inventory build up due to instability of supply chains.
Truck deliveries a Q1 record
Despite supply chain disturbances and production stoppages, truck deliveries increased 6% to a Q1 of 55,600 vehicles.
“We have had extra costs due to the supply chain disruptions as well as higher costs for material and have worked proactively with price management to mitigate them,” Volvo President and CEO Martin Lundstedt said. “We expect that the inflationary pressure will continue.”
Since Russia’s invasion of Ukraine and the imposing of sanctions, Volvo suspended sales, services and production in Russia. Russia accounted for about 3% of Volvo’s business. The company wrote off slightly less than half of its $950 million in total assets related to Russia, denting operating income.
Production stoppages
“The whole organization is doing an impressive job in supplying our customers with vehicles and machines and supporting them with services,” Lundstedt said. “However, the situation in the global supply chain for semiconductors and other components remains unstable.”
Production stoppages are likely to continue. The supply chain further stressed by COVID-19 lockdowns in China and the war in Ukraine.
Demand continues to outstrip supply, forcing Volvo to restrict order intake because of large backlogs, long delivery times and rising inflation.
Electric momentum
In North America, orders decreased by 73% to 6,017 trucks. Deliveries increased 7% to 13,908 vehicles. Volvo Trucks’ heavy-duty truck market share decreased to 9.8% from 10.3% a year ago. Mack Trucks’ market share fell to 5.3% from 6.6% in the same quarter of 2021.
A.P. Moller-Maersk ordered 110 Volvo VNR Electric trucks during Q1. (Photo: Volvo Trucks North America)
