Volkswagen Group has once again lowered its financial outlook in light of a challenging market environment, according to a Sept. 27 release.
The company adjusted its anticipated operating result to 18 billion euros — marking an operating return to sales ratio of about 5.6% — mainly due to developments in its passenger cars, commercial vehicles and tech divisions that have fallen short of original expectations, the release states. VW cautioned that a “deterioration in the macroeconomic environment is having a negative impact, which could result in further risks.”
It’s the second time in less than three months that VW has warned investors of reduced profits. In July, the automaker forecast a profit margin between 6.5% and 7% for its passenger cars division following unexpected operating expenses of 2.6 billion euros.
During the company’s Q2 earnings call, Arno Antlitz, CFO and COO, said Volkswagen Group has faced reduced margins this year with higher overhead costs due to wage increases and lower vehicle sales. It was also hit with 1 billion euros in restructuring costs in the first half of the year.
VW expects 2024 deliveries and group sales revenue to be less than previously announced, according to the Sept. 27 release. This year, the company projects deliveries will be 9 million vehicles, down from 9.24 million vehicles in 2023 — and far lower than its earlier guidance of a 3% increase over last year’s total.
Similarly, Volkswagen Group’s sales revenue was initially expected to increase 5% in 2024. But now, the company is forecasting 320 billion euros in sales revenue this year, about 2.3 billion euros less than the 2023 total.
VW said its net cash flow for the year will be about 2 billion euros, which takes into account expenses for planned M&A activity of 3.5 billion euros. About 2 billion of the 3.5 billion euros are set aside for the automaker’s planned joint venture with Rivian, per the release.
Volkswagen Group will report Q3 earnings on Oct. 30.