Volkswagen Profit, Sales Rise Despite Continuing Emissions, Trade Headwinds -- Update
01 August 2018 - 06:41PM
Dow Jones News
By Max Bernhard
Volkswagen AG (VOW.XE) on Wednesday reported a rise in
second-quarter net profit and sales, despite booking a 1.6 billion
euro ($1.87 billion) charge from its diesel-emissions crisis and
facing several challenges over the past months, which it warned
would continue through the end of the year.
The world's biggest car manufacturer by sales confirmed its 2018
guidance, excluding special items. Shares traded lower as much as
3% following the news.
Net profit in the quarter came to EUR3.23 billion euros ($3.78
billion), compared with EUR3.04 billion in the year-earlier period,
and sales rose 3.4% to EUR61.15 billion, the German car maker said.
Analysts had expected net profit of EUR3.21 billion and revenue of
EUR62.68 billion, according to a consensus estimate provided by
FactSet.
"We cannot rest on our laurels because great challenges lie
ahead of us in the coming quarters--especially regarding the
transition to the new WLTP test procedure," said Chief Executive
Herbert Diess, who took the helm at Volkswagen in April.
Volkswagen has previously said the availability of certain
models, a sales and earnings, could be hit by the changeover to the
new WLTP, or Worldwide Harmonized Light Vehicle Test Procedure,
emissions regulation, which comes into effect on Sept. 1 in
Europe.
"We need to prepare a volatile second half of the year,
particularly due to the WLTP," said Chief Financial Officer Frank
Witter.
WLTP presents a near-term challenge, but Volkswagen should be
able to recoup most of the lost sales and profits in 2019, said
Barclays analysts Dorothee Cresswell and Kristina Church.
"Growing protectionism also poses major challenges for the
globally integrated automotive industry," Mr. Diess said, echoing
industrywide concerns.
Auto makers across the globe have been struggling with Chinese
tariffs on U.S.-made vehicles, as well as higher raw-material
prices because of U.S. tariffs on steel and aluminum imports.
Volkswagen's German peer Daimler AG (DAI.XE), as well as
Detroit's Big Three--General Motors Co. (GM), Ford Motor Co. (F)
and Fiat Chrysler Automobiles NV (FCA.MI)--have already warned that
rising trade tensions and tariffs could impact earnings.
Apart from the new emissions testing standard and escalating
trade disputes, Volkswagen also faces the continuing fallout from
its diesel emissions scandal. In 2015, the car maker admitted to
having equipped millions of diesel cars across the globe to dodge
emissions testing.
In a sign that the scandal is far from over, the chief executive
of VW's premium car maker Audi AG (NSU.XE), Rupert Stadler, was
arrested by German police in June and has since remained in
investigative custody. Mr. Stadler has in the past said he had no
prior knowledge that illegal software had been installed on
Volkswagen or Audi engines.
Mr. Stadler hasn't been charged with any wrongdoing. In Germany,
it is common practice for prominent individuals suspected of a
crime to be named by prosecutors in public. Being named a suspect
doesn't mean the person will ultimately be charged.
His arrest happened just days after German prosecutors imposed a
EUR1 billion fine on Volkswagen, also in relation to the
emissions-cheating scandal. Prosecutors said the penalty was one of
the highest ever levied on a German company.
Volkswagen confirmed its 2018 guidance, excluding special items,
forecasting sales to rise as much as 5% and operating return on
sales between 6.5% and 7.5%.
The company said it expects deliveries this year to moderately
exceed those in 2017.
Write to Max Bernhard at max.bernhard@dowjones.com;
@mxbernhard
(END) Dow Jones Newswires
August 01, 2018 04:26 ET (08:26 GMT)
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