VW rattled by coronavirus as profit forecasts drop
The Volkswagen (VW) Group says it expects to turn a far lower profit this year, as the auto giant struggles to weather the coronavirus pandemic.
“Overall, the Volkswagen Group expects operating profit for 2020 to be severely below the prior year, but still to remain positive,” the company said in a statement on Wednesday.
The second quarter of this year is expected to be particularly painful, with VW chief financial officer Frank Witter telling reporters in a telephone conference that the company is anticipating losses in the months of April, May and June.
“Operating profit in the second quarter will be negative,” he said.
Sales revenue for the whole year is also expected to be “significantly below the prior year’s level as a result of the Covid-19 pandemic,” the carmaker said as it reported its first quarter earnings.
The world’s biggest carmaker reported a drop in operating profits before special items to €0.9 billion (around $1 billion), down from $3.9 billion in the first three months of 2019.
Another category, profit attributable to shareholders, plummeted by 86 per cent to €405 millions.
It also suffered a plunge in pre-tax earnings to €0.7 billion, down from €4.1 billion.
The pandemic has led to a collapse in demand for new vehicles and forced carmakers to temporarily halt production.
Sales revenue in the first quarter fell by 8.3 per cent to €55.1 billion, while deliveries to customers across the Volkswagen Group – which includes Audi, Porsche, Skoda and other brands – plunged by 23 per cent on the year to two million vehicles.
Like most car manufacturers, VW shut its factories due to the risk of infection among its workforce and a lack of parts from suppliers.
Plants have gradually resumed production though, including the plant in the company’s home city of Wolfsburg, which restarted production on Monday.
Wednesday’s results were largely in line with earlier estimates released by Volkswagen.
“The global Covid-19 pandemic substantially impacted our business in the first quarter,” chief financial officer Frank Witter said.
Pointing to the reopening of German dealers and factories, he added: “We have thus taken initial steps together to get the business up and running again. The Volkswagen Group is steering through this unprecedented crisis with focus and determination.”
VW subsidiary Porsche reported from Stuttgart that operating profit for the quarter fell by more than a third to €572 million.
The sportscar maker, which is currently investing heavily in electrifying its range and in digitalization, sold around 56,000 units over the first three months, some 1.3 per cent down on the same period a year earlier.
The company noted that turnover had risen over the quarter by almost 4 per cent to more than €6 billion, attributing this to higher sales of the more expensive cars in its range.
Source: dpa