Volkswagen Group Reports Significant Earnings Decline in Second Quarter
The automotive giant Volkswagen Group has announced a substantial decrease in profits for the second quarter of the year. The company reported a post-tax earnings figure of €2.29 billion, representing a drop of over a third compared to the same period last year.
The Wolfsburg-based corporation attributed the decline to a combination of factors, including the impact of increased US tariffs, ongoing restructuring measures and reduced profit margins on electric vehicle models.
Looking ahead to the remainder of the year, Volkswagen now anticipates revenue remaining at roughly the prior year’s level. This revised forecast replaces a previous projection of an up to five percent increase. The group’s operating return on sales is now expected to fall within a range of four to five percent, down from the previously anticipated 5.5 to 6.5 percent. The net cash flow is also projected to be lower than initially estimated, potentially landing between €1 and €3 billion instead of the earlier forecast of €2 to €5 billion.
The company’s calculations incorporate tariff rates spanning from ten to 27.5 percent, with expectations of a ten percent tariff at the higher end. Volkswagen highlighted the “high uncertainty” surrounding the ongoing evolution of tariff situations and their potential effects and interactions. Added to these challenges are supplementary burdens arising from cost-cutting programs implemented across the Volkswagen, Audi and software subsidiary Cariad.