Volkswagen shares slip as it extends cost-cutting programme
Volkswagen shares declined on Thursday, after the German carmaker announced it would extend its cost-cutting measures beyond the second half of 2024.
The company, which owns a number of marques including Audi, Bentley, Seat and Skoda, reported a decrease in operating profit for the first half, down to €10.1bn from €11.3 billion in the same period last year.
It said the drop was largely due to non-operating expenses, including severance packages and business closures.
Volkswagen said it was committed to a €10bn savings plan, with plans to implement up to €4bn in cuts during 2024.
Despite the cost-saving efforts, the company acknowledged that its current operating margin of 6.3% fell short of its targets, given its product lineup and global presence.
On a positive note, Volkswagen's revenue rose slightly to €158.8bn from €156.3bn in the first half, buoyed by strong performance in its financial services division.
However, the automotive division faced a cash outflow of €0.1bn, attributed to increased investments in new models and ongoing supply chain challenges.
While overall vehicle sales saw a slight decline, growth in the North and South American markets helped offset decreases elsewhere.
In Western Europe, rising demand for electric vehicles led to increased order intake.
The company also highlighted progress in its strategic initiatives, including advancements in software development and key product programs.
Volkswagen confirmed its full-year outlook, projecting sales revenue growth of up to 5% and an operating return on sales between 6.5% and 7%.
The carmaker said it planned to invest between 13.5% and 14.5% in its automotive division and anticipated automotive net cash flow to range between €2.5bn and €4.5bn.
At 1348 CEST (1248 BST), shares in Volkswagen were down 1.94% at €101.20.
Reporting by Josh White for Sharecast.com.