The Volkswagen Group has reported a significant drop in profits for the second quarter of the year. The automotive giant’s net profit after tax decreased by more than a third year-on-year, reaching €2.29 billion, according to a company announcement released on Friday.
The Wolfsburg-based company attributed the decline to a complex set of factors, including increased US tariffs, ongoing restructuring initiatives and reduced profit margins on electric vehicle models.
Looking ahead, Volkswagen now anticipates only a flat revenue performance for the current year, revising down previous projections of up to a five percent increase. The group’s operating profit margin is now expected to fall between four and five percent, a considerable shift from the initially projected range of 5.5 to 6.5 percent. Furthermore, the net cash flow is forecasted to be lower than previously expected, now predicted to be in the range of €1 to €3 billion, compared to the prior expectation of €2 to €5 billion.
The company is factoring in tariff rates ranging between 10 and 27.5 percent, with the upper end assuming duties of 10 percent. A statement released emphasized “high uncertainty regarding the further development of the tariff situation and their effects and interdependencies”. Contributing to these challenges are additional financial pressures resulting from cost-saving programs underway at Volkswagen, Audi and the software subsidiary Cariad.
