Europe’s biggest carmaker, Volkswagen, has issued a warning that the outlook for commodity markets remains uncertain. This comes after the company confirmed it had a significant impact on its third-quarter profits due to commodity hedges.
The company’s chief financial officer, Arno Antlitz, expressed his dissatisfaction with the profitability, stating that it did not meet its ambitious targets. The news has disappointed investors, as Volkswagen had previously released preliminary third-quarter results that cut its profit margin outlook for the current year.
Like many other industrial companies, Volkswagen is dedicated to hedging against changes in the price of raw materials. This practice may result in non-cash gains or losses, usually at the end of each quarter. In the third quarter, Volkswagen experienced a non-cash loss of 2.5 billion euros, which the company will not be able to offset at the end of the year.
Given the unpredictable nature of commodity markets, Volkswagen has announced that it will quickly identify and implement potential cost cuts across all of its brands.
Despite these challenges, the German carmaker confirmed that it posted 78.8 billion euros in third-quarter sales, a 14% increase in operating profit to 4.9 billion euros. The company also maintained its expectation to deliver between 9 million and 9.5 million vehicles to customers this year, with group sales revenue projected to be 10% to 15% higher than in 2022.
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