carmaker
Big profit, worry about the gas: VW accounts for the first quarter
The Volkswagen factory is reflected in a VW logo – so far, the car manufacturer’s earnings have continued to flow. Photo: Ole Spata/dpa
© dpa-infocom GmbH
Today, Volkswagen is announcing details of the course of business at the beginning of the year. The start of the Ukraine war at the end of February is only partially reflected in this. But the unrest increases.
In the midst of growing concerns about energy security and rising inflation, as well as the global economic upheavals of the Ukraine war, Volkswagen is giving its interim report on the first quarter of 2022 on Wednesday.
Preliminary data from mid-April already shows that Europe’s largest car company has been earning lavishly so far. However, the Wolfsburg are preparing for further risks of the conflict.
For January to March, Chief Financial Officer Arno Antlitz reported operating profit adjusted for special items from the diesel affair of 8.5 billion euros. Of this, 3.5 billion euros come from papers with which VW hedges against rising raw material prices. In the same period of the previous year, the profit in day-to-day business was slightly lower (4.8 billion euros) if this book effect is included. Even then, however, there were already changed commodity valuations.
If inflation rises sharply, as is currently the case, the calculated value of such contracts will increase on the balance sheet. However, they can hardly be made into money because the group is dependent on the associated parts.
Energy is getting more expensive
The supply of microchips and various basic resources continues to falter, and the situation has worsened since the Russian attack on Ukraine at the end of February. And in the most important single market, China, new tough corona restrictions meant that the production lines at VW had to stand still for a long time. Additional production stops are imminent.
In addition, energy costs more and more. “The danger for Europe is huge,” said CEO Herbert Diess at an event organized by the “Wolfsburger Allgemeine Zeitung” and “Wolfsburger Nachrichten”. “The resulting inflation can destabilize Europe.”
Despite high demand, the VW Group was only able to deliver 1.9 million vehicles worldwide in the first quarter, a good fifth less than a year ago. In China, there was a drop in sales of 23.9 percent. Decreasing the overall number of cars and diverting remaining electronics into full-size and e-models is keeping profits up so far.
VW recently expressed caution about the further course. For the time being, the goal is to keep 7 to 8.50 euros in the till for every 100 euros in sales this year. Analysts believe that revenues can increase again by up to 6 percent to 266 billion euros.
Diess on the gas embargo: “We don’t even want to introduce ourselves”
Above all, however, energy security is hardly calculable. Should gas imports from Russia be stopped across the board in Western Europe, the remaining quantities would probably first be distributed to private households and public institutions – not to industry.
“If we were really cut off from deliveries, that would be a difficult situation for Germany,” warned Diess. “We don’t even want to imagine that.” A sudden lack of Russian natural gas could also delay VW’s switch from coal to gas for its own electricity and heating plants.
At its headquarters, the company also supplies the city of Wolfsburg. “The threat that we no longer have a gas supply is also a serious threat for Wolfsburg,” said Diess. “We are now feverishly working on operating our coal-fired power plants for a longer period of time and making sure that the gas allocation – if it comes – would be taken into account in such a way that we can continue to supply the city.”