FRANKFURT (Reuters) – Shares in Volkswagen fell 1.5% in early Frankfurt trade after Europe’s biggest carmaker late on Tuesday issued a profit warning due to charges related to the possible closure of Audi’s Brussels plant.
Volkswagen said the costs of finding an alternative use for the Brussels plant or closing it, as well as other unplanned expenses, would have an impact totalling up to 2.6 billion euros ($2.8 billion) in the 2024 financial year.
“The profit warning wasn’t expected. Reaction depends very much on analyst feedback, especially if they accept the ‘one-off’ character,” said a local trader.
As a result of the charges, which also include expenses related to the closure of the gas turbine business of MAN Energy Solutions, Volkswagen now expects an operating return on sales of 6.5-7% in 2024, down from 7-7.5% previously.
Like European peers, Volkswagen is under pressure to cut costs in the face of fierce Chinese competition at home and abroad, one of the drivers of a push to realise efficiency gains of 10 billion euros.
“Any move by VW to reduce its cost base will be welcomed by the market. They’re addressing their high fixed costs base, and that’s more important,” said Stephen Reitman of Bernstein Research.
($1 = 0.9241 euros)
(Reporting by Victoria Waldersee; Writing by Christoph Steitz; Editing by Miranda Murray)
Comments