The Volkswagen group returned in the first quarter of 2021 to a level of results close to the pre-pandemic level, despite the persistence of the health crisis and the “slight effects” of the shortage of electronic chips, which should be “more significant” in the second quarter . The German group reports a net profit of 3.4 billion (3.05 in the first quarter of 2019) and an operating profit of 4.8 billion (3.9 in the same period of 2019). These results, which have risen sharply over the course of a year, make it possible to “increase forecasts” for the current year, the group said.
Improve profitability
The operating return on sales is expected to be between 5.5% and 7% this year, compared to a previous range of between 5% and 6.5%. VW also increased its projection for net cash flow and net liquidity, seeing its shares climb up to 2.4% at the Dax 30 in Frankfurt, then dropped to € 221 (+ 1.4%) around 10am. Since the beginning of the year, the shares of the Wolfsburg house have gained more than 40%, the best performance on the main German list.
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“We started the year with great momentum,” said CEO Herbert Diess in the statement. While demand has rebounded across the automotive sector in this early phase of 2021, manufacturers are grappling with a severe shortage of chips forcing them to suspend and prioritize vehicles that deliver the highest margins. Diess, as other automotive CEOs have already made known, said that the problems will increase in the second quarter and that some lines will be interrupted “for a few days, a few weeks”, even if the consequences will not be as pronounced as for some competitors.
The battle for stocks, including steel and precious metals
The battle to secure supplies is daily. Stellantis warned yesterday that the global semiconductor shortage will worsen between April and June, while Ford predicted a $ 2.5 billion drop from lost earnings from poor chip supplies. “We are fighting day after day,” Diess said in an interview with Bloomberg TV. “We are doing everything to keep production running.”
But there are not only semiconductors. Rising commodity prices, from steel to precious metals, are putting a strain on the auto industry, Diess said. “Finding new sources, this will certainly be a challenge for 2021. The demand is increasing for everyone and the supply is limited”.