BERLIN — Volkswagen said supply chain troubles were the new norm as it reported stagnated earnings in the third quarter, but the carmaker still expects growth in the autos market next year as some bottlenecks look likely to ease.
The carmaker lowered its expectations for deliveries this year to be on par with 2021, down from a previously-forecast 5%-10% rise, but maintained its earnings outlook of hitting the upper end of a 7%-8.5% margin by cutting fixed costs.
Plans to bring software unit Cariad, plagued by overspending and long delays, back on track were underway with an internal meeting taking place on the topic on Friday afternoon and several key decisions expected in coming weeks, Chief Executive Oliver Blume said.
But a planning round scheduled for November had been postponed because of changing “economic realities”, Chief Financial Officer Arno Antlitz said, with the next strategy updates to come in March 2023.
Blume declined to specify whether delays in sorting out Cariad’s troubles affected the decision to postpone the planning round.
Meanwhile, the brands were progressing on an exercise modelling preparation for a listing to identify their strengths and weaknesses, the results of which will be presented at a capital markets day next year.
No brand is specifically being readied for an IPO, Blume added, stating this was simply a strategy to highlight value hidden in the conglomerate.
The hoped-for boost in Volkswagen’s valuation following the listing of Porsche AG has not materialised, with the carmaker’s stock down more than 28% year-to-date and the sportscar brand’s valuation overtaking its former parent.
High costs
Third quarter earnings stagnated below pre-pandemic levels at 4.3 billion euros ($4.29 billion), under the burden of its Porsche listing, suspension of business in Russia, the write-off of a self-driving startup, as well as issues securing parts.
“Challenges to our supply chain will become the rule, not the exception,” Blume said, citing barriers to technology transfers between East and West.
A lack of semiconductors and other critical parts meant the carmaker has 150,000 unfinished vehicles and is stocking up on supplies to protect against further shortages in winter, Antlitz said in an earnings call.
Earnings of 6% across the group were boosted by a 19.4% margin in the sports and luxury brands, more able to pass on rising costs by hiking prices than volume brands whose buyers are squeezed by inflation.
Volkswagen’s shares fell 2.7%, underperforming Germany’s DAX, which was down 0.8%.
It took a 1.9 billion euro non-cash impairment charge resulting from the write-down of its investment in Argo AI, a self-driving startup it jointly owned with Ford Motor Co, which will now shut operations.
Volkswagen remains committed to Level 4 autonomous driving, Blume said, and would decide in the coming month whether to progress with a new partner.
Volkswagen and Ford shifted spending from the business on Wednesday, dragging Ford into a net loss with a non-cash pretax impairment of $2.7 billion.
Source: www.autoblog.com