AFP – German automaker Volkswagen (VW) reported a decline in second-quarter profits yesterday as the group grappled with lower car deliveries and restructuring costs.
The 10-brand auto giant made a net profit of EUR3.6 billion (USD3.9 billion) between April and June, a 4.2-per-cent fall on a year ago.
Revenues nevertheless rose 4.1 per cent to EUR80 billion, VW said, boosted by a strong performance in the financial services unit.
Car deliveries, however, dipped by 3.8 per cent to 2.2 million units.
Increases in western Europe and North and South America failed to offset a 19-per-cent plunge in deliveries in the key Chinese market, where VW and other carmakers are facing fierce local competition.
Global deliveries of the group’s less expensive Seat and Skoda vehicles were up in the second quarter, but those of pricier Audi and Porsche models were down.
Higher fixed costs, one-off charges and “unplanned provisions for the severance programme” as VW looks to cut personnel costs, further weighed on the bottom line.
The rising costs and cooling demand in China prompted Volkswagen to tweak its profit margin forecast in July.
The group now expects an operating return on sales of 6.5-7.0 per cent, from 7.0-7.5 per cent previously.
Volkswagen last year announced plans for a EUR10-billion savings programme and has flagged cuts to its workforce over the coming years to improve profitability.
Looking ahead, VW said it still expected revenues to grow by five per cent in 2024.
“However, we must make significant efforts on the cost side in the second half and beyond in order to achieve our targets,” said the group’s chief financial.
