Volkswagen keeps outlook, says Porsche IPO on track
Volkswagen said it expected to hit the high end of its profit target range for 2022 as supply chain bottlenecks ease and said it was still aiming to list the Porsche brand this year despite its CEO double jobbing as boss of both companies.
Volkswagen shares rose 2.4% on Thursday following the second quarter results, as the German carmaker said it was confident output would increase in the second half.
The company, which saw deliveries drop a fifth in the first half, expected them to rise overall toward the lower end of its forecasted range of 5% to 10% this year.
But higher pricing and continued cost-cutting measures will allow it to still deliver at the high end of a 7%-8.5% operating margin target range, chief financial officer Arno Antlitz said.
The CFO dismissed the notion that early warning signs of recession could spell trouble for demand, highlighting the strength of the Chinese market and Volkswagen’s still full order books.
“We realise the challenges for 2023 but we are partially optimistic,” Antlitz said. “These order books will carry us to at least the first quarters of 2023.”
Antlitz also said that work on a listing of the sports luxury brand Porsche continued “with more emphasis than before”, after last Friday’s leadership change raised questions about the plans.
Porsche boss Oliver Blume will replace Herbert Diess as Volkswagen chief executive on Sept 1.
The decision to have Blume serve as CEO of both Volkswagen and Porsche – which has drawn investor criticism because of worries it could hurt Porsche’s IPO – was “not temporary”, Antlitz said, with Blume’s paycheck split evenly between the two roles.
As first-half production problems hampered output in volume segments, premium brands boosted Volkswagen’s finances, with Audi registering a 51% jump in operating profit and Porsche up 22%, while it fell 8% at the Volkswagen brand.
“Overall, numbers showed a business on an improving path with continued benefits from mix and price effects across the group,” Bernstein analyst Daniel Roeska wrote in a client note.
Rival carmaker Stellantis on Thursday said strong pricing power and sales of high-margin cars including EVs helped beat profit forecasts in the first half, despite headwinds from energy and raw material inflation and semiconductor scarcity. A drop in Volkswagen’s operating profit to 4.7 billion euros ($4.81 billion) before special items in the second quarter still beat expectations of seven analysts polled by Refinitiv of 4.6 billion euros.
Volkswagen reported an unusually high operating profit of 8.5 billion euros in the first quarter, but said this was largely due to positive effects of commodity hedges and was not cash-effective.
By contrast, the world’s no. 2 carmaker said the second-quarter result included around 2.4 billion euros in losses from derivatives, mainly due to raw material hedging. “Before these book-value losses, the underlying performance even improved over a good Q1 2022,” it added.
It said monthly production volumes across the group improved significantly towards the end of the second quarter particularly as coronavirus restrictions lifted in China.
