Volkswagen reports profit slump in the second quarter

The Volkswagen Group recorded a significant drop in profits in the second quarter. According to the company, earnings of €2.29 billion were down a good third compared to the previous year. This was due, among other things, to the poor performance of the Group's expensive brands Porsche and Audi in day-to-day business.

VW also cited high conversion costs as reasons, as well as the current strong performance of its electric models – which, however, have lower margins. In its most important sales market, China, the automaker again earned significantly less. However, more cars were sold in South America, and there were also increases in Europe.

Total operating profit fell by a good 29 percent to €3.83 billion, corresponding to an operating margin of 4.7 percent. This was in line with analysts' expectations. Despite a slight increase in deliveries, sales fell by three percent to €80.6 billion.

Forecast cut

Volkswagen expects lower profits this year due to import tariffs in the United States, but also due to the ongoing weakness of Porsche and Audi . The Wolfsburg-based DAX-listed company announced that operating profit as a percentage of sales is likely to be only between four and five percent. Previously, the company forecast 5.5 to 6.5 percent. Sales revenue itself is now projected at the previous year's level; previously, growth of up to five percent was expected.

Analysts had already averaged a margin of less than five percent. If US import tariffs on cars are reduced from the current 27.5 percent to ten percent as part of an agreement, the upper end of the profit estimate is targeted. The European Union and the United States are currently negotiating an agreement. VW CEO Oliver Blume, who is also CEO of Porsche , was personally involved in the talks.

Audi plans to cut 7,500 jobs, Porsche at least 1,900. In contrast, the core brand VW is benefiting financially from the company's major cost-cutting program launched at the end of last year: More than 35,000 jobs are to be eliminated by 2030—that's roughly one in four jobs. 20,000 employees have already agreed to give up their jobs, mostly as part of partial retirement.

jj/pgr (dpa, afp, rtr)