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Xinhua Silk Road
CLASS

Volkswagen has returned to earn profits with the Chinese demand

November 02, 2020


Abstract : The automotive company led by the CEO Herbert Diess has closed the third quarter with profits equal to 2.5 billion. The result was made possible particularly thanks to China.

MILAN, Oct. 30 (Class Editori) - The German automotive giant Volkswagen is overcoming the pandemic difficulties: after six months strongly affected by the COVID-19 emergency, its quarterly profits have come back to a positive territory. The company led by the CEO Herbert Diess published yesterday the financial documents related to the July-September period: operating revenues amounted at €3.18 billion (59.3 billion of overall sales), a profit margin around 5.4%, profits equal to 2.58 billion and an operating profit of 3.2 billion, therefore higher than 2.6 billion expected by analysts. These figures have strongly decreased compared to the same period in 2019; however, they are surely positive if compared to those of the first two quarters of this year, characterized by the setback of the global automotive market due to lockdown measures implemented by governments in order to contain infection cases. Therefore, the automotive company from Wolfsburg had experienced a record loss of €1.7 billion in the April-June period.

The group's figures in the first nine months of the year seem to be less negative than what could have been forecasted just some months ago, by underlining a turnover of 155.5 billion, with a declining trend by 16.7% and operating profits which reached 2.3 billion compared to the previous 14.6 billion.

The result was made possible mainly by the Chinese demand for sport premium vehicles Audi and Porsche branded which, in the third quarter, due to the return to a condition of almost normality in the Asian country, has experienced an increase by 3%, by compensating the previous -1.1% in the delivery of new vehicles. Collectively, the positive impact of measures to contain costs implemented at the beginning of the emergency should not be overlooked; according to what has been stated in the press release broadcasted yesterday by Volkswagen, they have helped to improve net liquidity up to €24.8 billion, compared to 18.7 billion recorded in June.

In addition, even if the international epidemiological framework may change again for the worse, as for the annual outlook, Volkswagen states to expect a fourth positive quarter and has therefore confirmed the previous esteems, according to which it expects that sales in 2020 will be lower than last year, but at such a level to guarantee a gross and net operating profit "in positive territory", even though "significantly decreasing", on a trend basis.

Also for this reason, yesterday the bond of the German producer stood out at the Frankfurt Stock Exchange, by closing the session increasing by 1.13%, a step away from €127 per share.

(Source: Class Editori)

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