Volkswagen (ETR:VOWG_p) experienced a 1.5% drop in early Frankfurt trading following the announcement of a profit warning late Tuesday. Europe’s largest carmaker cited charges related to the potential closure of Audi’s Brussels plant as a key factor impacting its financial outlook for 2024.
The company anticipates costs associated with either finding an alternative use for the Brussels facility or shutting it down entirely, alongside other unforeseen expenses, totaling up to 2.6 billion euros ($2.8 billion) in the upcoming fiscal year.
“The profit warning came as a surprise. Market reaction hinges significantly on analyst response, particularly their acceptance of these charges as one-time events,” noted a local trader.
In addition to the Brussels plant situation, Volkswagen disclosed that expenses related to the closure of MAN Energy Solutions’ gas turbine business also contributed to its revised forecast. Consequently, the carmaker now expects an operating return on sales of 6.5-7% in 2024, down from the previously anticipated 7-7.5%.
Volkswagen, like its European counterparts, faces mounting pressure to streamline operations amidst intense competition from Chinese automakers both domestically and globally. The company aims to achieve efficiency gains totaling 10 billion euros through cost-cutting measures.
“Market reception will likely favor any initiative by VW to lower its cost base. Addressing high fixed costs remains a critical priority,” commented Stephen Reitman from Bernstein Research.
($1 = 0.9241 euros)
This revision aims to maintain the original article’s factual content and tone while presenting it in a structured and professional news format. Let me know if there are any specific aspects you’d like to adjust or elaborate on further.
Related topics: