- After the profit target was cut, VW draws up the balance sheet for the second half of the year
Europe's largest automaker will present its half-year results today (9:00 AM). CEO Oliver Blume and CFO Arno Antlitz will present the figures for January to June. Just three weeks ago, the company lowered its full-year targets. Instead of 7.0 to 7.5 percent of sales, the Volkswagen Group now expects to achieve an operating margin of 6.5 to 7.0 percent, or 6.50 to 7.00 euros in profit per 100 euros in sales.
Audi is particularly weighing on these results. Due to weak demand for the E-model Q8 e-tron, the VW subsidiary is now considering prematurely ending production of the model in Brussels. The plant could be closed. Additionally, there are costs of around 900 million euros from ongoing staff reductions at the core Volkswagen brand.
Up to 454,700 euros in severance pay
The core Volkswagen brand aims to reduce administrative personnel costs by 20 percent as part of its cost-cutting program and introduced a new severance package in the spring. According to media reports, those who leave early could receive severance pay ranging from 67,700 to 454,700 euros, depending on their length of service. By the end of May, when the deadline for the enhanced "turbo bonus" passed, 50 percent of the intended severance budget had already been allocated.
The failed sale of the gas turbine business of subsidiary MAN is also weighing on results. The German government had banned the planned sale to China on security grounds, and VW now plans to close the gas turbine business.
Weak China business is a burden
The company is also struggling with weak demand for new cars. In the first half of the year, deliveries fell by 0.6 percent to 4.35 million vehicles, as the company announced in mid-July. In China, where the VW group sells around a third of all cars, business is particularly sluggish. There was also a slowdown in the sale of electric vehicles. In the first half of the year, the company delivered 317,200 E-models worldwide, 4,400 fewer than in the same period last year. The company expects sales figures to pick up in the second half of the year.
Audi and Porsche with weak numbers
The subsidiaries Audi, Porsche, and Traton with the truck brands MAN and Scania had already presented their half-year figures in recent weeks. While Traton benefited from a high order backlog and saw sales and profits rise, Audi and Porsche reported disappointing figures. Both blamed a weak start to the year. In the months of April to June, both performed somewhat better. The two premium brands are traditionally the most important profit drivers in the VW group.
Link to the financial calendar
Other automakers might be closely watching Europe's largest automaker's half-year results today, as they could provide insights into industry trends. The company's other operations, such as the gas turbine business of subsidiary MAN, have also been facing challenges and contribute to the overall performance.
