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Truck maker AB Volvo falls on lower earnings, dividend disappointment

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STOCKHOLM (Reuters) -AB Volvo shares slid more than 3% on Friday after the Swedish truck maker reported lower fourth-quarter core earnings and proposed a smaller-than-expected dividend.

Volvo said demand for its trucks across key regions remained high, but shortages of components and freight capacity led to production disruptions and increased costs, denting profits.

Its shares were down 3.1% at 207.70 Swedish crowns in morning trade as analysts highlighted supply chain disruptions and a lower-than-expected dividend.

The company proposed an ordinary dividend of 6.50 crowns per share and an extra dividend of the same amount. Citi analysts, however, had forecast a total payout of 17.5 crowns per share.

"We had hoped for a more formal dividend policy," they said in an analyst note. "This will raise questions as to whether capex and R&D will now increase going forward."

Volvo said it recorded more than 60,000 deliveries in its truck business during the fourth quarter as market share increased in Europe and North America for heavy duty trucks.

"The situation in the global supply chain for semiconductors and other components remains unstable, characterised by disruptions, unpredictability and lack of freight capacity," President and Chief Executive Martin Lundstedt said in a statement.

"We will therefore continue to have disruptions and stoppages both in the production of trucks and in other parts of the group."

The company also said strong construction activity and infrastructure investment boosted its construction equipment segment in Europe and North America, offsetting a steep decline in China.

Adjusted operating profit at the maker of trucks, construction equipment, buses and engines fell to 10.06 billion Swedish crowns ($1.07 billion) from 10.93 billion crowns a year ago, but just ahead of the 10 billion crowns forecast by analysts in a Refinitiv poll.

The company, whose brands include Mack and Renault, said net sales rose to 102.38 billion crowns from 96.92 billion crowns a year ago. Analysts had forecast sales at 92.84 billion crowns.

Volvo also forecast European and U.S. heavy truck registrations to hit 300,000 in 2022, unchanged from a previous outlook.

($1 = 9.3707 Swedish crowns)

(Reporting by Johan Ahlander and Michael Kahn; Editing by Kenneth Maxwel and Mark Potter)

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