Volkswagen set to report lower earnings

German car giant Volkswagen is expected to report lower profits and revenues when it reports second-quarter results on 28 July, as the exhaust emissions scandal continues to impact sales and add to costs.

Source: Bloomberg

The group, which includes the VW, Audi, Skoda, Seat, Porsche and Bentley car brands, Ducati motorcyles and Scania and MAN trucks, is expected to report consolidated revenue of €53.8 billion for the three months to end-June, according to analyst consensus figures compiled by Bloomberg, down from €56.0 billion a year earlier. Operating profit is expected to fall to €3.2 billion, from €3.49 billion. 

The company put out initial results for the whole of the first-half of the year on 20 July. Its operating profit before 'special' items was €7.5 billion, up from €7.0 billion a year earlier and well above market expectations as its VW brand staged a recovery in the second quarter and it stripped costs out of the wider business. However the special items, mainly related to further legal risks in North America as a result of the emissions scandal, were €2.2 billion, meaning the actual operating profit was €5.3 billion, down from €6.8 billion.

The car maker’s outlook was downbeat. It expects sales revenue for 2016 as a whole to fall by as much as 5% compared with 2015.

‘In addition to the emissions issues, the highly competitive environment as well as interest and exchange rate volatility and fluctuations in raw materials prices all pose challenges. We anticipate positive effects from the efficiency programs implemented by all brands and from the modular toolkits,’ the company wrote in a statement.

Earnings forecasts for the second quarter:

The downtrend in Volkswagen shares is still intact. A price gap between €143 and €154 would only be filled if resistance at €128 is breached. On the downside, there is potential psychological support at €100.

Weekly chart for Volkswagen:

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