Volkswagen earnings, operating profit hit by virus

Volkswagen AG said Wednesday that earnings fell in the first quarter, and the spread of the coronavirus will hit operating profit for 2020.

Operating profit before special items in the quarter fell to 900 million euros ($975 million) from EUR3.9 billion the previous year, the German car maker said.

Earnings before tax fell to EUR700 million for the quarter, compared with EUR4.1 billion a year earlier.

Revenue, as previously reported, reached EUR55.1 billion.

The return on sales margin was around 1.6%.

“The global Covid-19 pandemic substantially impacted our business in the first quarter,” said Frank Witter, chief financial officer at Volkswagen.

“We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially.”

Earlier this month, the car maker withdrew its guidance for the full year. It said at the time that it couldn’t accurately forecast the impact of the pandemic on customer demand, supply chain and production.

Volkswagen expects the automotive net cash flow in the first quarter to reach negative EUR2.5 billion, mainly because of a weaker underlying operating result as well as negative effects in working capital due to higher inventories and lower liabilities.

Automotive net liquidity is seen at EUR17.8 billion.

Jessica Sier

Source:marketwatch.com