STOCKHOLM: Sweden-based automaker Volvo Car Group (VOLCARb.ST) reported a smaller-than-expected fall in first-quarter operating earnings on Thursday and said while overall demand remained healthy it may still cut costs as the global economy slows down.

Volvo Cars, majority-owned by China’s Geely Holding, said operating earnings fell to 5.1 billion Swedish crowns ($494.63 million) in the quarter from a year-ago 6 billion crowns, beating a mean forecast of 3.6 billion crowns, according to Refinitiv estimates.

The automaker reaffirmed its outlook for “solid double-digit growth” in retail sales this year, provided there were no major supply disruptions.

While demand for the company’s cars was healthy, macroeconomic conditions were challenging, CEO Jim Rowan said.

“Given the long-term nature of the headwinds our industry is likely to face, we are also evaluating the need for further targeted cost actions that are sustainable over time and that will contribute to our growth,” Rowan said in a statement.

Lithium prices, a large source of cost for electric cars, had started to decline, expecting the full effect to kick in a few months’ time, the CEO said.

Automakers such as Volvo have begun slowly emerging from an extended period of supply chain pain, not least chip shortages and production disturbances in China, which have hit output and driven up costs.

The company said its manufacturing had improved, but still saw some shortages, which would continue to affect production in the second quarter.

While soaring inflation and higher prices on raw materials such as lithium also weighed, Volvo has seen robust demand for its models, which it aims to be all-electric by the end of the decade, with unit sales up 10% in the first quarter.