Volkswagen profits dip in second quarter

FRANKFURT: German automaker Volkswagen reported a decline in second-quarter profits Thursday as the group grappled with lower car deliveries and restructuring costs.

The 10-brand auto giant made a net profit of 3.6 billion euros ($3.9 billion) between April and June, a 4.2-percent fall on a year ago.

Revenues nevertheless rose 4.1 percent to 80 billion euros, VW said, boosted by a strong performance in the financial services unit.

Car deliveries, however, dipped by 3.8 percent to 2.2 million units.

Increases in western Europe and North and South America failed to offset a 19-percent plunge in deliveries in the key Chinese market, where VW and other carmakers are facing fierce local competition.

Global deliveries of the group’s less expensive Seat and Skoda vehicles were up in the second quarter, but those of pricier Audi and Porsche models were down.

Higher fixed costs, one-off charges and “unplanned provisions for the severance programme” as VW looks to cut personnel costs, further weighed on the bottom line.

The rising costs and cooling demand in China prompted Volkswagen to tweak its profit margin forecast in July.

The group now expects an operating return on sales of 6.5-7.0 percent, from 7.0-7.5 percent previously.

Volkswagen last year announced plans for a 10-billion-euro savings programme and has flagged cuts to its workforce over the coming years to improve profitability.

Looking ahead, VW said it still expected revenues to grow by five percent in 2024.

“However, we must make significant efforts on the cost side in the second half and beyond in order to achieve our targets,” said Arno Antlitz, the group’s chief financial officer.