The German automaker Volkswagen (VOWG_p.DE) decreased its profit margin projection for the current year, disappointing some investors, and its shares dropped more than 3% on Monday, reaching their lowest level since April 2020.
The largest automotive group in Europe predicted a return on sales of 7.5-8.5% on Thursday, but on Friday, it predicted a return of 7.0-7.3%, attributing the decline to unfavorable impacts from raw material hedges. Volkswagen maintained its sales and delivery projections.
However, Deutsche Bank stated that it viewed the consistent delivery guidance as a sign of confidence and anticipated that, as a result, consensus forecasts would decline by “low single digits.”
Tim Rokossa, an analyst at the German bank, stated, “We note that the mark-to-market impact of derivatives obviously remains a downside and upside risk.”
“With volume and revenues holding up as expected, we see the warning to be company-specific rather than presenting a broad read-across to the sector,” he said in a note.
By 0800 GMT, Volkswagen shares were down 3% in Frankfurt, leading decliners in the 1%-down European auto sector (SXAP).
Volkswagen said that raw material hedges resulted in a non-cash loss of 2.5 billion euros ($2.65 billion) that it will not be able to recover by the end of the year.
It said operational profit increased by 14% to 4.9 billion euros, and third-quarter revenues increased by 12% to 78.8 billion euros. On Thursday, the business is expected to reveal its complete quarterly results.
