(Finance) – Profits peak for Volkswagen, who is suffering greatly crisis in the auto sector and has already announced the closure of three factories and related staff layoffs, generating a huge outcry in Germany and the rest of Europe. A crisis triggered by the German government’s choice to focus heavily onelectric carwhich suffered heavily competition from Chinese manufacturers and produced one explosion of operating costs of European car manufacturers.
“Our nine-month results reflect a difficult market context and underline the importance of continuing the restructuring programs we have launched”, admitted CEO Arno Antlitz, adding that the collapse in operating margin demonstrates “the urgent need of significant cost reductions and recovery of efficiency”.
The results of the quarter
The German car giant closed the third quarter with revenues of 78.5 billion euros, down 0.5% compared to the same period in 2023, due to weak demand.
Operating profitwhich is affected by operating costs and restructuring charges of 2.2 billion euros, it contracted by 41.7% to 2.85 billioni, resulting significantly lower than the 3.89 billion expected by analysts, while the operating margin was reduced to 3.6%, the lowest level in over 4 years. Net profit thus fell by 63.7%, to 1.58 billion euros.
The balance of the nine months
The accounts of the nine months they close with a turnover of 237.3 billion euros, a slight increase compared to the 235.1 billion euros in the 9 months of 2023. The operating result is equal to 12.9 billion eurosresulting in a decrease of 21% compared to the 9 months of 2023 (16.2 billion euros). The Operating Margin stood at 5.4%. The net profito fell by 30.7% to 8.9 billion.
The car crisis
Europe’s largest automaker has already cut its forecast for the current year twice during the quarter, joining rivals BMW and Mercedes.
The company is currently engaged in one battle with the unionsafter announcing the closure of three factories in Germany and thousands of layoffs, throwing the entire country, already in recession, into shock. A second cycle of negotiations between Volkswagen and the powerful German union IG Metall is expected to begin today, after the works council leader threatened to break off talks and launch a strike.