VW Loses Almost $1 Billion In The First Half, But Expects Black 2020
“China gives hope and may show the way out of the coronavirus”
Volkswagen, the world’s biggest selling automaker, said on Thursday it lost approaching $1 billion in the coronavirus-stricken first half of a 2020, but expects to remain in the black for the whole of the year. Just.
Global sales will fall drastically in 2020, but should return to 10 million plus in 2021, according to Norddeutsche Landesbank Girozentrale (NLG) analyst Frank Schwope.
In the first half of 2019, VW declared an adjusted operating profit of 10 billion euros ($11.8 billion), but in 2020 this turned into a loss of 800 million euros ($950 million). The overall profit margin slipped into the red across VW’s brands, which include Audi, Porsche, Lamborghini, SEAT and Skoda. The margin was a negative 1.5% compared with a profit of 7.2% in the same period last year.
VW said in a statement accompanying the results that it expects its 2020 operating profit result to be sharply lower, but positive.
VW also cut its dividend for 2019 to 4.80 euros per ordinary share and 4.86 euros per preferred share from a previously targeted 6.50 euros and 6.56 euros.
Investors are gritting their teeth as automakers begin to reveal their financial results for the first half of 2020. Much red ink is splashing over their accounts, and damage from the coronavirus night well end up terminal for the most exposed manufacturers.
Plenty of loss-makers
So far, Mercedes parent Daimler reported a 2nd quarter operating loss of 1.68 billion euros ($1.95 billion), although that wasn’t as bad as some had feared. Volvo, owned by China’s Geely Automobile Holdings Ltd, reported an operating loss of close to $100 million in the first half, after a $5.5 billion profit in the same period of 2019.
Earlier Thursday, Renault of France said it recorded a net loss of 7.29 billion euros ($8.6 billion) in the first half compared with operating income of 1.5 billion euros in the same period last year. But earlier this week, Groupe PSA remained solidly in profit despite the turmoil undermining the European market. PSA, which owns Peugeot, Citroen, Opel and Vauxhall brands, and is negotiating a merger with Fiat Chrysler Automobiles (FCA), said its net profit in the first half slid to 595 million euros ($700 million) from 1.83 billion euros ($2.2 billion) in the same period of 2019.
For VW, its China venture remained in profit, although it fell to 1.4 billion euros ($1.6 billion) from 2.1 billion euros ($2.5 billion). This will give investors some relief, according to NLG’s Schwope.
“China gives hope and may show the way out of the coronavirus,” Schwope said.
Meanwhile, as VW investors look for reasons to be happy about the rest of the year, the company is about to launch its long-delayed purpose- built electric car, the ID.3. This promises to shine some warmth on VW’s reputation as it recovers from the dieselgate scandal.
Close to midday in Europe, VW shares were down almost 4% at 139.7 euros.