UPDATE 2-Truckmaker Volvo rides market rebound but supply chain feeling strain

* Broad demand recovery lifts profit, orders

* Raises market outlook for Europe, N America, Brazil

* Plans ordinary and extra dividend totalling 15 SEK/share

* Warns strained supply chain to impact Q1 (Adds detail, background)

STOCKHOLM, Feb 3 (Reuters) - Swedish truckmaker AB Volvo reported fourth-quarter core earnings well above market expectations on Wednesday, raised its forecasts for some of its main markets and rolled out a hefty shareholder payout amid a broad recovery in demand.

But the rival of Germany’s Daimler and Traton also cautioned that the rebound and a global chip shortage had left supply chains under pressure, causing production disturbances and higher costs at least during the current quarter.

Adjusted operating profit at the maker of trucks, construction equipment, buses and engines rose to 10.93 billion crowns ($1.30 billion) from 9.22 billion a year earlier, above the 8.77 billion seen by analysts according to Refinitiv data.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets, which has improved the confidence in the future among our customers,” Volvo CEO Martin Lundstedt said in a statement.

Volvo has seen a steep recovery since last spring, when it was forced to halt production at many plants as the first wave of the coronavirus and widespread lockdowns hit the wider industry.

“Overall, Volvo’s Q4 report was better than we had expected in terms of EBIT, orders and outlook,” Handelsbanken Capital Markets analyst Hampus Engellau said in a research note.

“2021 looks better both from a market outlook as well as operating leverage although Q1 will be tougher due to bottle necks at sub suppliers.”

Gothenburg-based Volvo has historically struggled to cope with sharp swings in demand, but work to strengthen its resilience under Lundstedt’s lead has buttressed profitability, helping lift its shares 9% since the turn of the year.

Volvo’s order intake of trucks rose 61% from the year-ago quarter and the company, whose U.S. rival Paccar lifted its market guidance last week, raised its outlook for heavy-duty truck registrations in both Europe and North America this year.

The company, which abandoned plans to pay annual and extra dividends last year as the first wave of the COVID-19 pandemic struck but still retained a vast cash pile, said it would make a total shareholder payout of 15 crowns per share for 2020. ($1 = 8.3959 Swedish crowns) (Additioal reporting by Johannes Hellstrom; editing by Ana Nicolaci da Costa and Carmel Crimmins)