FRANKFURT (Reuters) – Shares of Volkswagen fell 1.5 percent in early Frankfurt trading after Europe’s largest carmaker issued a profit warning late on Tuesday over accusations related to the possible closure of an Audi plant in Brussels.
Volkswagen said the costs of finding an alternative use for the Brussels plant or closing it, as well as other unplanned expenses, would have an impact of up to 2.6 billion euros ($2.8 billion) in the 2024 fiscal year.
“The earnings warning was not expected. The reaction largely depends on analysts’ reactions, especially if they accept the ‘one-off’ character,” said a local trader.
As a result of the charges, which also include expenses related to the closure of MAN Energy Solutions’ gas turbine business, Volkswagen now expects an operating return on sales of 6.5-7% in 2024, down from 7-7.5% previously.
Like its European peers, Volkswagen is facing pressure to cut costs in the face of fierce Chinese competition at home and abroad, one driver behind a push for €10 billion in efficiency gains.
“Any move by Volkswagen to reduce its cost base would be welcomed by the market. It is addressing its high fixed cost base, and that is more important,” said Steven Reitman of Bernstein Research.
(1 dollar = 0.9241 euro)