Absentee feedback from relevant parties was a point highlighted by the Commission, indicating they had yet to receive opinions from potential stakeholders.
Volkswagen Group, the German automotive giant, reported a significant drop in profit for the second quarter of 2023. The earnings per share (EPS) for the company in Q2 2023 were 3.65 euros, a decrease from the 5.13 euros in the same quarter of the previous year. The operating profit for the quarter was 2.82 billion euros, a decrease from the 4.39 billion euros in the same quarter of 2022.
The drop in profit was primarily due to the combined impact of U.S. tariffs, restructuring costs, and lower margins on electric vehicle (EV) sales. The U.S. tariffs imposed on imports from the EU cost Volkswagen approximately €1.3 billion in the first half of 2023. The tariffs on vehicles increased to 25%, with a planned rise to 30% from August 1, which added substantial cost pressures.
Restructuring costs related to internal corporate changes added around €700 million in expenses. The company's increasing sales of EVs, while growing in volume, negatively impacted profits because electric vehicles typically have lower profit margins compared to combustion engine cars.
Despite a slight increase in vehicle deliveries (+1.2% to 2.27 million units), these factors led to a 29-38% decline in operating profits in Q2 compared to the previous year. As a result, Volkswagen lowered its operating return on sales forecast for 2023 to 4.0-5.0%, down from an earlier expectation of 5.5-6.5%.
The net income for Volkswagen Group in the second quarter of 2023 was 2.29 billion euros, a decrease from the 3.94 billion euros in the same quarter of the previous year. The net cash flow for the quarter was 2.2 billion euros, a decrease from the 3.6 billion euros in the same quarter of 2022. The free cash flow for the quarter was 1.8 billion euros, a decrease from the 3.3 billion euros in the same quarter of the previous year.
However, the company's net liquidity as of the end of the second quarter of 2023 was 24.1 billion euros, an increase from the 21.3 billion euros at the end of the same quarter of the previous year. The revenue for the quarter was 61.4 billion euros, a slight increase from the 61.1 billion euros in the same quarter of 2022.
Despite the profit drop, Volkswagen Group's earnings after taxes for the second quarter were 2.29 billion euros, and the company's market share and sales volume remained unaffected. The reasons for the drop in profit were not related to general economic conditions or global market trends.
Volkswagen Group announced the financial results on Friday, providing investors and stakeholders with a clearer picture of the company's performance in the challenging trade and cost environment. The company will continue to focus on its electric vehicle strategy and cost management to improve its profitability in the coming quarters.
The decline in Volkswagen Group's profit was influenced not only by lower margins on electric vehicle sales but also by the impact of U.S. tariffs and restructuring costs in the industry. Furthermore, the finance sector, with its emphasis on profitability, will closely watch Volkswagen's efforts to boost earnings, particularly in its automotive and transportation divisions, as the company moves forward with its electric vehicle strategy and cost management initiatives.
