Despite falling sales: VW doubles quarterly profit

Status: 05/04/2022 08:54

Although VW sold far fewer vehicles than a year earlier, the group gained almost double. This was mainly due to expensive brands. The automaker is sticking to its forecasts.

Despite a drop in sales and the consequences of the war in Ukraine, Volkswagen earned almost twice as much in the first quarter as a year earlier. Profit after tax increased year-on-year from 3.4 billion euros to 6.7 billion euros, as reported today by DAX Group. In addition, the management around boss Herbert Diess confirmed the annual forecast.

One-fifth less vehicles sold

Before interest and taxes and before exceptional items from the diesel business, operating income increased over the first three months of the year from 4.8 billion to 8.5 billion euros. The Wolfsburg-based company benefited massively from financial instruments with which it insured itself against rising commodity and energy prices. Given the rise in prices, the value of hedging transactions rose sharply on the balance sheet.

But the real business was also doing well thanks to higher selling prices, especially for the more expensive brands: although VW delivered a good fifth fewer vehicles to its customers due to the lack of chips, the sales increased by 0.6% to 62.7 billion euros – also thanks to the takeover of the American truck manufacturer Navistar.

Regardless of rising costs and supply bottlenecks, VW is sticking to its profit forecast for the current year. Europe’s largest automaker has confirmed the outlook that sales are expected to grow by 8-13% in 2022 and operating efficiency is expected to be in the range of 7-8.5%. However, management limited that the effects of the latest developments in the war in Ukraine and restrictions in the fight against the pandemic in China on the company could not be definitively assessed.

“Proven resilience”

“Our group has once again shown great resilience in the first quarter, despite the unprecedented challenges the world is facing due to the terrible war in Ukraine and the ongoing pandemic with its effects on the supply chains. ‘supply,’ CEO Diess said. In the first quarter, bottlenecks in semiconductors and wire harnesses were largely mitigated by reallocating sources of supply between major markets in Europe, China and North America and the South.

Even in a world increasingly polarized by war, the automaker is determined to expand its global presence and continue its transformation into a sustainable, all-digital mobility provider. Three weeks ago, Volkswagen presented key data on the day-to-day course of business based on first estimates and surprised with an operating profit before exceptional items of around 8.5 billion euros.

Support for more expensive models, lower bulk activity

Upper-class girls, in particular, posted high numbers again at the start of the year. In contrast, the bulk business with flagship brand Volkswagen was particularly affected by the more difficult business situation. Sales of the so-called volume group, which also includes Skoda, Seat and light commercial vehicles, fell from 27.4 billion to 24.4 billion euros in the first quarter, as the company announced.

Before exceptional items, operating income amounted to 900 million euros, after 1.4 billion euros in the same period of the previous year. The VW Group cited the consequences of the lack of chips, the corona crisis in China in particular and the effects of the war in Ukraine as reasons. The VW passenger car brand itself slid its sales from 17.6 billion to 14.9 billion euros. She was able to increase her earnings from 490 million to 513 million euros.

Things have gone better in other areas. The Premium brand group, with Audi, Bentley and Lamborghini, increased its adjusted operating profit by 1.5 billion to 3.5 billion euros, while sales remained roughly at the level of the year previous. Porsche also earned more in current business, at 1.4 billion euros. Sales rose from seven billion to 7.3 billion euros.

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