Volvo Cars said on Thursday that 2023 is 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, said its fourth-quarter operating profit dropped to 3.4 billion crowns ($322.2 million)from 3.7 billion crowns a year ago.

"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 expects 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.

The company once again proposed not paying out a dividend. (Reporting by Marie Mannes, additional reporting by Agata Rybska; Editing by Anna Ringstrom and Sherry Jacob-Phillips)