Volkswagen overcomes Covid-19 dry spell, only a lack of chips remains a problem

Volkswagen is increasingly leaving the Covid-19 dry spell behind and earned well at the beginning of the year despite the worsening supply problems with semiconductors. From January to March there was a profit of around 3.4 billion euros – almost seven times as much as in the same quarter of the previous year, which had already been marked by the first pandemic consequences. The group was able to increase its sales by around 13 percent to 62.4 billion euros. Worldwide deliveries increased by more than a fifth to a good 2.4 million vehicles, as Volkswagen announced today.

CFO Arno Antlitz calls this a “strong performance”. However, one still has to keep an eye on the shortage of important electronic components: “The undersupply of semiconductors in the entire industry will probably have somewhat more pronounced effects in the second quarter than before.”

CEO Herbert Diess was confident that the recovery after the Covid 19 pandemic will continue: “We started the year with a lot of momentum. A lot can be expected from us in the further course of the year.” Volkswagen has raised the outlook for the coming months: Subject to further containment of the pandemic, sales are now well above the previous year’s figure and a profit margin of 5.5 to 7 percent of sales in ongoing business is targeted.

Operationally, things went well in the first quarter of the year. Thanks to the recovery in demand for automobiles in more and more countries, the VW Group’s earnings before interest and taxes, at 4.8 billion euros, more than fivefold – the group thus returned to the pre-crisis level. Business picked up in China, the largest single market in particular. Sales of electric and hybrid vehicles accelerated, and other manufacturers also reported particularly high growth.

The situation at the individual group brands also stabilized in the first quarter. The core division VW Passenger Cars was able to almost double its earnings in ongoing business to 900 million euros. At Audi, the operating profit jumped to around 1.4 billion euros after the Ingolstadt subsidiary had just ended up in the black at the beginning of 2020. Porsche posted a plus of a good 1.2 billion euros, a year ago it was less than half. The Spanish brand Seat and MAN continued to post losses.

A major reason for the overall improvements in the group was the increasing sales of more expensive, profitable models. In addition, there were changed raw material valuations. Further cost reductions for personnel and administration, among others, also played a role – this resulted in “restructuring expenses” of 400 million euros.

Volkswagen kept the number of employees constant compared to the previous year; further job cuts are planned for the core brand through early retirement and partial retirement. Volkswagen shareholders accounted for a good 3.24 billion euros of the net result.


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