Volkswagen (VWAGY.US) said its third-quarter earnings stagnated below pre-pandemic levels due to supply chain issues. Volkswagen lowered its forecast for this year’s deliveries to the same level as 2021 and below its previous forecast of 5%-10, due to the burden of the listing of Porsche and the write-off of autonomous driving startups, as well as problems with the supply of fixed components. % growth, but will maintain its guidance for margins to reach the upper limit of 7%-8.5%.
“The supply chain challenges we face will become the norm,” said chief executive Oliver Blume. Volkswagen has an unfilled order for 150,000 vehicles due to a lack of semiconductors and other key components, and the company is stocking up on supplies to prevent supply chain shortages from deepening over the winter, Chief Financial Officer Arno Antlitz said on an earnings call.
He added: “The company is currently full of orders, and some car models were sold out 18 months ago.”
The company’s third-quarter operating profit was reported to be about 4.3 billion euros ($4.29 billion), lower than its pre-coronavirus performance level, mainly due to a one-off $1.6 billion from the suspension of the company’s Russian operations and the listing of its Porsche spending impact.
A 19.4% profit margin in the sports and luxury brands segment boosted the group’s 6% earnings level. Compared with other brands squeezed by inflation, the Volkswagen brand business segment is better able to pass on rising operating costs by raising prices.
In terms of order delivery, the company’s first nine months of deliveries were indeed better than in the third quarter of last year, when sales across the auto industry fell due to chip shortages. Even as luxury automakers such as Mercedes-Benz caught up with 2019 earnings this quarter, they are still lagging pre-pandemic profit levels.
Porsche has overtaken its former parent Volkswagen to become Europe’s most valuable automaker after it went public in September.
In addition, Volkswagen’s difficulties include a non-cash impairment charge of 1.9 billion euros from impairment charges on its investment in autonomous driving startup Argo AI, which it co-owns with Ford Motor Co (F.US). The Pittsburgh-based self-driving car technology company jointly controlled by Ford and Volkswagen will shut down operations.
VW’s initial investment is valued at $2.6 billion, which includes $1 billion in cash and $1.6 billion in the merger of Volkswagen’s European self-driving unit into Argo. Volkswagen also bought a stake in Argo from Ford for an additional $500 million.
Both companies shifted spending from operations on Wednesday, dragging down Ford’s net loss, with a non-cash pretax write-down of $2.7 billion.