Volvo Cars posted a drop-in profit in the second quarter of the year, but the Swedish automaker forecast double-digit sales for the year despite high inflation and rising interest rates.

Volvo owned majorly by Chinese automaker Geely, reported a net profit of 3.5 billion kronor ($342 million) in the second quarter compared to nine billion kronor in the same April-to-June period in 2022.

The automaker said the drop was due to this year's figures being compared to earnings boost in 2022 from the stock listing of its electric car unit Polestar.

The company, which plans to ditch fossil fuel vehicles by 2030, said fully electric cars accounted for 16 percent of sales in the second quarters, more than doubling from last year.

The firm is emerging from bottlenecks in supply chains that affected the auto sector after countries abandoned Covid restrictions.

This is as businesses across the globe face higher costs for raw materials following the invasion of Ukraine by Russia in February 2022, which has sent inflation soaring.

Volvo Cars reported a 25 percent increase in retail sales, with 178,800 units sold in the second quarter.

"While rising interest rates in some of our largest markets put pressure on the consumer and the overall market, demand for our cars continues to be healthy," chief executive Jim Rowan said in the earnings statement.

"Assuming there are no further unexpected supply chain disruptions, we expect a solid double-digit growth in retail sales for the full year," he added.