New boss Diess with tailwind: Volkswagen should deliver 4.4 billion euros profit

04/23/2018

New boss Diess with tailwind Volkswagen should deliver 4.4 billion euros profit

REUTERS

Volkswagen: After the change of boss from Müller to Diess, investors remain optimistic with regard to profit and turnover

Volkswagen announces its first quarter results on Thursday (26 April). Following the surprise takeover of the chief position by former brand manager Herbert Diess in mid-April, the quarterly figures as well as the future strategy of the Executive Board are in focus. The Volkswagen overseers have handed over the leadership of the group two and a half years after the outbreak of the diesel affair Diess. Not only does he want to intervene more in the operative business than his predecessor Matthias Müller, but he also wants to take the future topics in the company into his own hands. Vehicle IT and research and development will in future be under the responsibility of the CEO.

At the same time, Diess wants to bundle the many vehicle brands according to their profitability, thereby leveraging synergies. Thus, the mass brands VW, Seat, Skoda and small commercial vehicles will be managed under his direction together. Audi should catch up on the back of the Daimler brand Mercedes-Benz and BMW, Porsche, along with other luxury brands such as Bentley, Bugatti and Lamborghini recover rich profits.

All this is Volkswagen Show stock market chart In the core business, despite the Diesel Stigma, it is doing well worldwide. In the US, sales are running at the VW brand and also at the premium subsidiary Audi. In the largest single market in China, business is booming. The topic on the stock market is whether and when the heavy commercial vehicle division, VW Truck & Bus, goes public and whether the company is not selling peripheral areas.

Analysts expect 58 billion euros in sales – and 4.4 billion profit

Analysts expect that VW has continued to grow in the first quarter, despite the uncertainty surrounding the diesel future and impending driving bans. On average, experts expect sales of 58.2 billion euros, about 3.5 percent more than a year earlier.

The operating profit (EBIT) should have increased without special effects only by one percent to 4.4 billion euros. However, this would still correspond to a margin of more than 7.5 percent – the target issued by the Executive Board for 2018 as the maximum.

Analyst Stefan Burgstaller of Goldman Sachs assumes that the quarterly earnings per share increased from 6.67 to 6.81 euros. Analyst Tim Rokossa of Deutsche Bank expects a strong quarter for the first three months of 2018. However, currency effects are likely to have depleted sales.

Admittedly, the trend towards more city SUVs should have driven up sales per vehicle sold. Nevertheless, revenues should not have risen as much as the number of cars delivered. The margin is expected to be at the upper end of the board’s forecast, or even slightly above. However, he does not expect management to raise its annual forecast ahead of mid-year figures in the summer.

VW expects 5 percent revenue growth in 2018

So far, the VW leadership expects demand for new passenger cars in 2018 to increase more slowly than in the previous year. Deliveries are expected to grow moderately. In terms of sales, the Executive Board expects an increase of 5 percent. Based on the Group EBIT, it aims for a return of between 6.5 and 7.5 percent. The brand VW should achieve a return of 4 to 5 percent – that also applies to the time until 2020. In 2025, the return of the brand should be at least 6 percent, a value that other mass producers such as the French Opel dam PSA Group in the car industry already reach or exceed.

After the price collapse as a result of the diesel scandal, the VW papers have recovered. But they are still a long way from their record high of 262.45 euros three years ago. Most recently, the price of VW preference shares was around 170 euros. Before the scandal became public in September 2015, they had cost € 162.40, but then dropped sharply. Over the past twelve months, they have increased by more than a fifth. Since the beginning of 2018, they are also up to now, while the Dax Show stock market chart still stuck in the minus.

la / dpa-AFX

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