The Wolfsburg car manufacturer Volkswagen remains on a cost-cutting path after a decline in profits in the spring. Chief Financial Officer Arno Antlitz (54) said on Thursday when presenting the balance sheet for the second quarter that the profit margin before restructuring costs was slightly above expectations. However, Antlitz was not satisfied: “A return of 6.3 percent after six months is not enough for our needs.”
Volkswagen is sticking to its forecast, but has to stretch a lot to achieve it. “We will have to make considerable efforts in terms of costs in the second half of the year and beyond in order to achieve our goals,” Antlitz explained further. The Wolfsburg-based company is aiming for a return of 6.5 to 7 percent for the year as a whole.
At a good 83.3 billion euros, sales in the second quarter were 4.1 percent above the previous year’s level, which was in line with analysts’ estimates. Operating profit fell by 2.4 percent to just under 5.5 billion euros; the bottom line was that it was 4.2 percent less at just over 3.6 billion euros. Here the analysts had feared an even greater decline of 3.5 billion euros.
In the first half of the year, VW recorded a slight increase in sales to 158.8 billion euros and a decline in operating profit to a good ten billion euros. Revenues rose particularly in the Core brand group, which includes the core brand Volkswagen including commercial vehicles as well as Skoda and Seat/Cupra. However, the return on sales fell to 5 percent due to the restructuring expenses.
Billion-dollar savings program for VW
The Progressive brand group Audi as well as Porsche generated lower revenues and a significant decline in profits. The luxury boutique Porsche in particular presents VW CEO Oliver Blume (56) with major challenges, because there are not only economic problems, but there is also increasing disagreement internally about the course taken. You can read more about this in the current manager magazine cover story: The Porsche problem
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CEO Blume has prescribed a billion-dollar savings program for the Wolfsburg-based car manufacturer. For the core brand Volkswagen alone, costs are expected to fall by ten billion euros by 2026, while the return is expected to increase to 6.5 percent. The group has even targeted an 8 percent return for the Core brand group.
The company only lowered its forecast at the beginning of July and announced that the Audi factory in Brussels due to the weak demand for the top electric model Q8 e-tron built there. The additional costs, including the already booked provision of 900 million euros for the severance program and other factors, were put at a total of 2.6 billion euros.