Stuck in the wrong gear

31 May 2016 By Olaf Storbeck

The stricken carmaker is making fewer vehicles than a year ago. Yet it hired more people in the first quarter. Investment and distribution costs grew too. Chief Matthias Mueller may be busy with a still-unresolved emissions scandal, but there’s little sign of needed cost-cutting.

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Volkswagen revenue decreased 3.4 percent in the first quarter of 2016 compared to a year earlier, while vehicle production shrank 6.1 percent. Group operating profit excluding one-offs was down 5.9 percent to 3.1 billion euros.

The net cash pertaining to VW’s automotive business - and excluding its financial services arm - stood at 26 billion euros at the end of March, 5 billion euros higher than a year earlier.

“Safeguarding the Volkswagen Group’s robust financial strength for the long term remains a top priority in light of the expected effects of the diesel issue,” finance chief Frank Witter said in a statement.

Europe’s largest carmaker reiterated its 2016 guidance. It expects sales revenue to fall by up to 5 percent and an operating margin between 5 and 6 percent.

Volkswagen preference shares fell 3.1 percent to 133.60 euros by 0928 BST, while the DAX index was trading 0.3 percent lower.

Context News

The net cash pertaining to VW’s automotive business - and excluding its financial services arm - stood at 26 billion euros at the end of March, 5 billion euros higher than a year earlier.

Europe’s largest carmaker reiterated its 2016 guidance. It expects sales revenue to fall by up to 5 percent and an operating margin between 5 and 6 percent.

Volkswagen preference shares fell 3.1 percent to 133.60 euros by 0928 BST, while the DAX index was trading 0.3 percent lower.

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