08/03/2018
Earnings boosted “It’s hard to believe” – VW returns close to Toyota
DPA
Volkswagen headquarters in Wolfsburg
Toyota In terms of earning power, it ties in with earlier heydays. The Japanese group increased its operating profit in its first quarter by just under one-fifth to the equivalent of around 5.3 billion euros and thus outperforms premium manufacturers in terms of returns.
What in this country of the Dilemma about the new WLTP exhaust gas measuring system but until now has been covered and even industry experts surprised: The Volkswagen Group, long tail in the industry, has now caught up with the Japanese in terms of profitability. Adjusted for the burden of the diesel crisis, the Wolfsburg were in the period April to June with 9.1 percent margin within striking distance to Toyota, which came in the same period to 9.3 percent.
“It’s hard to believe, but it’s really true,” said Jürgen Pieper from Bankhaus Metzler. He even sees Volkswagen in terms of profitability even on par with Toyota. Because in the car business Toyota came to 9.1 percent EBIT margin. The performance of VW go because of the Discussion about delays due to the new exhaust measurement cycle however under. “The problems are still hanging on Volkswagen like a millstone on the neck.”
Pieper points out that WLTP is a consequence of the Volkswagen-instigated exhaust manipulation on which the Wolfsburg still have to bud. However, the underlying result of the Dax Group is convincing. In the second quarter, Lower Saxony – adjusted for special effects – posted an operating profit increase of almost a quarter to around 5.6 billion euros. On the stock market, however, played especially the Management warning against margin pressure a role and caused a price decline.
Size helps now
That does not fit the picture that some Volkswagen analysts have. Because some of them consider it possible that the company will soon pass Toyota’s return on investment.
Under his new CEO, Herbert Diess, the Group’s twelve brands are increasingly taking advantage of its size and benefiting more from the modular strategy that was perfected a few years ago, said Marc-Rene Tonn from Bankhaus M.M. Warburg. According to his calculations, Volkswagen has already beaten the Japanese rival in the past quarter in the pure car business with an adjusted yield of 10.1 percent. This is driven by the high earning power of Porsche, but also by Skoda, Audi and improvements in the main brand VW.
Toyota, the world’s third-largest carmaker after Volkswagen and the alliance of Renault, Nissan and Mitsubishi, says the greater stability is the case, according to Pieper. The Japanese would not shoulder any additional burdens like their German rivals. Both companies equally drove forward the global presence and became heavily involved in new technologies for the transition to more climate-friendly mobility. “Both are managed with a consistent hand.”
Toyota scores in the home market
Toyota has long been ahead of the competition in terms of profitability because of its lean production, its focus on a manageable number of models, and ongoing savings. In recent years, Toyota had fallen behind a bit, also because the competition was better and the Japanese themselves had some problems to fight. But now Toyota returns to its old strength. Operating income of 682.6 billion yen in the first fiscal quarter exceeded analyst expectations.
Frank Schwope from NordLB attributes this to savings. “In Japan alone, auto sales have dropped six percent, but operating income has increased by nearly a quarter.” Due to the stronger yen exchange rate, the management, which is known for its caution, continues to anticipate a profit decline of around four percent for the fiscal year ending March, 2019.
At the beginning of its fiscal year, Toyota was particularly successful in Asia, where revenue climbed 40 percent. The group was strong above all in China and Thailand. Thanks to savings, things also went well in the domestic market of Japan. On the other hand, in North America, the largest market in the Japanese market, revenues declined as Toyota pushed back against a shrinking market with price reductions.
The import tariffs threatened by US President Donald Trump are causing concern. Toyota sells more vehicles in the United States than any other Japanese automaker and would therefore be particularly affected by such charges. The group manufactures about half of its cars sold there in the US and imports the remaining vehicles from Japan, Canada and Mexico.
luk, reuters
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