Volkswagen shares slide after it trims margin outlook

Shares in German auto giant Volkswagen Group reached their lowest point since April 2020 on Monday after it announced a downward revision in its profit margin outlook for the current year.

According to Reuters, the reduction in profit margin expectations for 2023 was due to adverse impacts stemming from raw materials hedges.

The firm now anticipated a return on sales within the range of 7.0% to 7.3%, a decrease from the previous forecast of 7.5% to 8.5%.

Volkswagen did, however, maintain its outlook for deliveries and sales figures.

The company said its financial woes were driven by raw materials hedges, leading to a non-cash loss of €2.5bn that it did not expect to offset by year-end.

Despite the challenges, Volkswagen reported 12% growth in third-quarter sales to €78.8bn and a 14% increase in operating profit to €4.9bn.

In response to the news, analysts at Deutsche Bank expressed confidence in Volkswagen’s consistent delivery outlook.

Reuters quoted Deutsche Bank’s Tim Rokossa as emphasising the potential impact of derivatives on Volkswagen’s financial performance, suggesting that the firm’s warning should be considered company-specific rather than indicative of broader trends in the sector.

At 1200 CEDT (1100 BST), shares in Volkswagen Group were down 2.77% at €100.28.

Reporting by Josh White for Sharecast.com.