Volkswagen's first-quarter profit drop spurs further cuts
Volkswagen Faces Industry Challenges and Implements Strategic Measures
By Rachel More
First-Quarter Financial Performance
BERLIN, April 30 (Reuters) - Volkswagen must fundamentally overhaul its business as tariffs, geopolitical shocks and weak car demand batter the industry, the automaker said on Thursday, with a sharp first-quarter profit drop underscoring the urgency.
Cost-Cutting Initiatives
"In this environment, the cost-cutting measures planned so far are not enough," finance chief Arno Antlitz said as the company presented quarterly results, calling for further steps to secure the German group's future.
Profit and Revenue Figures
Volkswagen reported an unexpected 14% fall in first-quarter operating profit to 2.5 billion euros ($2.9 billion). Analysts had expected profit to be broadly flat, according to a Visible Alpha poll.
Key Factors Impacting Performance
Tariffs and Market Challenges
The group, which includes Porsche and Audi, has been hit by steep U.S. tariffs expected to cost about 4 billion euros a year, and is battling to arrest sliding sales in China and the U.S.
Job Cuts and Restructuring
Around 50,000 jobs are already to be cut across the group in Germany by 2030.
Revenue and Margin Outlook
The Wolfsburg-based company posted quarterly revenue of 75.7 billion euros, down 2.5% and below analysts' estimate for 77.6 billion euros.
That translated into an operating margin of 3.3%. Volkswagen forecasts an operating margin of between 4 and 5.5% in 2026, after 2.8% in 2025.
Future Guidance and Risks
Outlook and Potential Risks
The group confirmed its full-year guidance but warned that it does not factor in a potential escalation in the Middle East conflict, which could hit demand and drive up raw material costs globally.
($1 = 0.8576 euros)
(Reporting by Rachel More. Editing by Kirsti Knolle and Mark Potter)
