Volkswagen’s quarterly operating profit falls 12% on semiconductor shortage

Volkswagen’s quarterly operating profit falls 12% on semiconductor shortage
Volkswagen’s quarterly operating profit falls 12% on semiconductor shortage

First modification: 28/10/2021 – 12:18

German car giant Volkswagen announced a 12% year-on-year drop in its third-quarter operating profit on Thursday due to a shortage of semiconductors, cutting off the volume of deliveries by 600,000 vehicles.

“In the third quarter we lost about 600,000 vehicles that could not be delivered to customers (…)”, explained its president Herbert Diess in a conference call.

“The worst must have already passed,” he added, after several months of global crisis of shortage of components.

The group’s operating profit fell 12% to 2.798 billion euros (3.25 billion dollars) due precisely to the global shortage of semiconductors.

Supply problems for these components even dragged a key subsidiary of the group, which includes its flagship car brand Volkswagen, to losses.

“The global shortage of semiconductors has particularly influenced the third quarter,” the group explained in a statement, which had to close several factories temporarily due to a shortage of microchips.

Vehicle sales fell 24% compared to the third quarter of 2020, which had already been bad due to the effects of the pandemic, and the group decided to reduce its forecasts for 2021.

The Chinese market was “particularly affected” by component shortages and high customer demand “could not be met,” they said in a statement.

The number of vehicles sold will be within last year’s figures, even though VW expected a “significant” increase.

However, Volkswagen did not lower its profitability forecast, and is betting on a margin of between 6.0% and 7.5%. This figure is very followed by analysts and fell to 4.9% between July and September.

Turnover should also set “clearly” above 2020, helped as last quarter by more profitable premium model sales.

“The third quarter results show that we have to make decisive progress in improving productivity” in the sector that includes for example the VW, Seat and Skoda brands, Chairman Herbert Diess said in a statement.

Despite its poor operating performance, the group posted a slight rise of 5.6% net profit in the third quarter to € 2.9 billion.

© 2021 AFP

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Volkswagens quarterly operating profit falls semiconductor shortage

 
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