German automotive giant Volkswagen reported a 20% decline in its operating profit for the first quarter of 2024 compared to the same period last year. The company attributed this downturn to lower sales and increased costs, particularly in its premium brands segment.
In figures released on Tuesday, Volkswagen disclosed that its operating profit amounted to 4.6 billion euros ($4.9 billion) in the first quarter of 2024, down from 5.7 billion euros in the corresponding period in 2023. The decline was primarily driven by reduced demand for its luxury brands and higher fixed costs, coupled with an unfavorable mix of countries, brands, and models.
Despite the challenges, Volkswagen managed to sell 2.1 million vehicles in the first quarter, representing a modest 2% decrease compared to the same period last year. Arno Antlitz, the Group’s CFO and COO, acknowledged the slow start to the year but remained optimistic about the company’s prospects for the rest of 2024.
The company’s luxury subsidiary, Porsche, also experienced a decline in operating profit, dropping to 1.2 billion euros from 1.7 billion euros in the first quarter of 2023. This decline was attributed to lower sales volumes, impacted by product development delays and customs-related issues.
However, Volkswagen reaffirmed its commitment to achieving its financial targets for 2024, which include a 5% increase in sales revenue and a full-year operating margin ranging between 7% and 7.5%. Antlitz expressed confidence in the company’s ability to generate momentum throughout the year, fueled by the launch of more than 30 new models across all brands and the gradual realization of efficiency improvements.
Despite the reassurances, Europe-traded shares of Volkswagen experienced a 2.6% decline at 9:00 a.m. London time, reflecting investor concerns about the company’s performance amid ongoing challenges in the automotive industry.
