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AB Volvo shares fall 7% after warning chip scarcity to hit output By Reuters


© Reuters. FILE PHOTO: IAA truck present in Hanover

STOCKHOLM (Reuters) – Shares in AB Volvo fell 7% on Tuesday after the Swedish truckmaker warned of a considerable hit on manufacturing within the second quarter because of the world scarcity of semiconductors.

The corporate, which has 18 manufacturing amenities globally, was compelled by the scarcity to chop manufacturing at its factories in Belgium and Brazil.

Deutsche Financial institution (DE:) analysts estimated that Volvo would make 16,000 fewer vehicles within the second quarter and consensus earnings might come down by 4-7% this 12 months.

The Swedish firm, a rival of Germany’s Daimler (OTC:) and Traton, mentioned late on Monday visibility into the provision chain of semiconductors was very low and that the disturbances would additionally influence different group enterprise areas.

Assuming 4 weeks of misplaced gross sales in Europe and Brazil and a higher than 30% drop by means of, the influence could be 3.6 billion Swedish crowns ($421.7 million) on second-quarter earnings earlier than curiosity and tax, Citi analysts estimated.

Semiconductor shortages have hit world automakers, forcing them to chop or halt manufacturing because the obtainable provide of chips had been booked by makers of client electronics akin to smartphones – the chip trade’s most well-liked clients as a result of they purchase extra superior, higher-margin chips.

U.S. automakers akin to Common Motors (NYSE:) and Ford, Germany’s Volkswagen (DE:) and Japan’s Honda Motor have all suffered successful to manufacturing.

Volvo Automobiles, owned by China’s Geely Holdings, had additionally mentioned it will quickly cease or alter manufacturing in China and america for elements of March.

($1 = 8.5363 Swedish crowns)

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