Due to high one-off costs in the third quarter, the Volkswagen Group suffered a noticeable drop in profits despite a decent run in day-to-day business. In the actual business, the Wolfsburg-based company was able to increase significantly, also because the previous year’s quarter was heavily influenced by Covid restrictions. A multi-billion dollar write-down on the entry into the US software company Argo, which was accompanied with great hopes three years ago, weighed on the bottom line on the profit. In addition, there were high non-recurring costs for the suspension of business in Russia and for the Porsche IPO. The group also had to narrow down the targets for deliveries for the year as a whole due to problems in the supply of parts.
the VW share
initially gave way, the preferred paper listed in the Dax lost up to 3.5 percent to just over 126 euros and was therefore one of the tail lights in the leading German index. JP However, Morgan analyst Jose Asumendi spoke of strong results if the special charges such as for Russia and the Porsche IPO were deducted from the operating result. Although there were many special effects, the numbers did not look as bad as feared, wrote Stifel expert Daniel Schwarz. Also the Porsche AG benefits
also fell a good 3.5 percent.
In the day-to-day business of the third quarter, VW drove sales and earnings increases. Deliveries of 2.18 million vehicles were also 11 percent higher than in the previous year, when the lack of electronic chips had severely restricted production. Earnings before interest and taxes (EBIT) increased by more than half to 4.3 billion euros. And it would have been even more noticeable if VW hadn’t had to shoulder 1.6 billion euros for the discontinued business in Russia and for the multi-billion dollar IPO of the Porsche subsidiary in Stuttgart. The bottom line, however, was only 2.13 billion euros after taxes, which is a good quarter less than a year ago.
Almost two billion euros write-off on Argo
That this week announced the end of the Argo software holding, in which Volkswagen wanted to have software developed for autonomous driving together with Ford, is now also financially significant for the group – the depreciation for this amounted to 1.9 billion euros. Even if VW CEO Oliver Blume (54) presented the step as a focus on software ambitions, the end for Argo also shows what difficult tasks await the new VW boss in terms of car software. Most recently, VW also had Cariad in its own software division to struggle with problems
, some of which delayed model launches and were one of the reasons for ex-boss Herbert Diess (64) leaving.
Blume wants to reorganize Cariad
Blume now wants to reposition Cariad. The software subsidiary should concentrate on its core competencies and have clear interfaces to the brands and cooperation partners, said Blume at a conference call on the quarterly figures. “If there are already solutions on the market, there is no need to develop them yourself,” said Blume. Diess had previously taken the view that the software for electric cars should be developed on its own. However, Cariad did not progress as quickly as planned. The delays in software development mean that important vehicle models are coming onto the market later.
The group is not yet rid of the shortage of parts. The group became a little more cautious when looking ahead. Management now expects deliveries worldwide to be at the level of the previous year, i.e. around 8.9 million vehicles sold. So far, there was still an increase of 5 to 10 percent in the plans – but this was considered very ambitious anyway in view of the previous sales figures. The reason for the shattered prospects are essentially problems in the supply chains, said VW Group CFO Arno Antlitz in the conference call.
The availability of parts will be particularly challenging in the fourth quarter, according to the CFO of the core brand VW passenger cars, Patrik Andreas Meyer. The Premium brand group around Audi, Lamborghini, Bentley and Ducati scaled back its sales targets and spoke of a persistently challenging supply situation. However, Antlitz sees no danger to the group’s sales and operating profit targets. Revenue should continue to grow by 8 to 13 percent compared to the 250 billion euros from the previous year. Of the turnover, 7 to 8.5 percent should remain as an operating result, and rather at the upper end of the range.