Volkswagen Takes $3 Billion Hit but Still Expects to Make a Profit This Year

Home Business Volkswagen Takes $3 Billion Hit but Still Expects to Make a Profit This Year
Volkswagen Takes $3 Billion Hit but Still Expects to Make a Profit This Year

Volkswagen still expects to post an operating profit this year despite the unprecedented crisis triggered by the CCP virus pandemic, which slammed sales and earnings in the first quarter.

The worlds largest carmaker said on April 29 that first-quarter operating profit plummeted to €904 million ($978 million) from €3.9 billion ($3.3 billion) a year ago, as vehicle sales fell. It warned that profit for the full year would be considerably below 2019, but still positive.

Volkswagen, which also owns the Audi, Porsche, and Seat brands, said group vehicle sales fell 25 percent to 1.9 million. Deliveries to customers were down 23 percent at 2 million.

Volkswagen Resumes Production
An employee wears a face mask on the production line at the Wolfsburg plant in Wolfsburg, Germany, on April 27, 2020. (Swen Pförtner/Getty Images)

“The global Covid-19 pandemic substantially impacted our business in the first quarter. Weve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially,” Volkswagens Chief Financial Officer Frank Witter said in a statement. “The Volkswagen Group is steering through this unprecedented crisis with focus and determination,” he added.

Carmakers have had to contend with a slump in demand for vehicles and a huge disruption to their operations, as measures to curb the CCP (Chinese Communist Party) virus pandemic shut down factories and kept customers at home. Ford on Tuesday posted a $1.9 billion loss for the first quarter, warning that this would balloon to $5 billion in the current quarter.

Volkswagen and other major carmakers have begun gradually restarting vehicle production across Europe. The German automaker opened its biggest plant in Wolfsburg, Germany on Monday after the longest shutdown in its 82-year history. Almost all of its factories in China, the worlds biggest car market, are already back at work.

The group has made 100 changes to the way it operates, as it tries to restart business without risking the health of hundreds of thousands of workers. “The health of our employees and suppliers remains the clear priority here,” said Witter.

Volkswagen
Volkswagen
Stephan Weil (SPD, R), prime minister of Lower Saxony, and Stefan Loth wear face masks during a visit to the production line at the Wolfsburg plant, in Wolfsburg, Germany, on April 27, 2020. (Swen Pförtner/Getty Images)

Volkswagen said it expects sales and profit to be “severely below the prior year, but still to remain positive.”

“Challenges will also arise particularly from the increasing intensity of competition, volatile commodity and foreign exchange markets, and more stringent emissions-related requirements,” it added.

Volkswagen and other German carmakers, BMW and Daimlers Mercedes-Benz, are expectedRead More – Source

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The Epoch Times

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