Volvo Cars said on Thursday 2023 was likely to be another challenging year despite healthy demand for its vehicles as the Swedish carmaker reported a fall in quarterly profit.

Volvo Cars, which is majority-owned by Chinese automotive company Geely Holding (0175.HK), said its fourth-quarter operating profit dropped to 3.4 billion crowns ($322.2 million)from 3.7 billion crowns a year earlier.

“While 2023 looks to be another challenging year, we are hopeful that the COVID-related supply shortages from China are behind us and that we continue to see steady improvement in the supply of semiconductors,” it said in a statement.

“Despite the global turbulence, uncertainty and our recent price increases, we continue to see healthy demand for our cars,” Volvo Cars said, adding it expected a “solid” double-digit growth in retail sales during 2023.

Volvo Cars and its peers have faced lingering chip shortages over the past year that have periodically hit manufacturing with the Sweden-based company forced at times to halt production at some factories temporarily.

Other supply chain issues, the energy crisis and red-hot inflation have also made the road more troublesome for the company.

However, Volvo Cars reaffirmed its mid-decade targets, which include by 2025 selling 1.2 million cars per year. Some analysts had said ahead of the report the target was too ambitious and would be more realistic a few years later.

“We remain doubtful whether the company will be able to achieve these targets before 2027 and think the company will have to significantly stretch its definition of ‘mid-decade’,” Bernstein said.

Toyota Motor (7203.T), which also reported results on Thursday, cut its annual manufacturing target in November and again on Thursday. This, like Volvo, is despite its vehicles sales rising.

December was the strongest month ever in cars produced for Volvo.

The company once again proposed not paying a dividend.