Like any major publicly traded business, Volkswagen regularly provides a financial outlook to its investors. That outlook usually includes forecasts of how the business will be doing over the next little while. Financial outlooks can range from a single quarter to an entire fiscal year.
In the wake of the global viral pandemic, VW is backtracking on their entire 2020 financial outlook. That’s not a huge surprise, since global economies — including car production and sales — have slowed to a crawl. Like most companies, Volkswagen can simply no longer predict what the rest of the year will bring. While trying to predict financial outlooks is always a bit of a guessing game, this year has unprecedented circumstances.
According to Reuters, VW recently withdrew its 2020 outlook.
“Volkswagen Group on Thursday withdrew its outlook for 2020 amid uncertainty related to the coronavirus outbreak which caused operating profit to drop 81% in the first quarter.
“Operating profit fell to 0.9 billion euros, which would be an 81% drop from 4.84 billion last year, and the group’s return on sales margin is expected to be around 1.6%, down from 8.1% in the first quarter of 2019.
“The full year outlook “can no longer be achieved”, Volkswagen said.
“VW said negative fair value impacts from commodity derivatives and currency effects hit the first quarter 2020 result by 1.3 billion euros.”
An 81% drop in profits would be a major concern for any company, especially one the size of Volkswagen. The company, which owns brands like Audi, Bentley, Bugatti, and Porsche, will publish its 2020 first quarter results on April 29. It won’t be pretty.
The company’s stock had been trading between about €150 and €185 for most of the last year. However, it plummeted to €87 in mid-March. It has recovered a bit since then, but this crisis is far from over. You can expect almost every other car manufacturer is in a similar position.