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Volkswagen (VWAGY) Reports Robust Preliminary Figures for 2020
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Volkswagen AG (VWAGY - Free Report) recently reported stellar full-year 2020 preliminary figures. The company projects operating profit, excluding costs related to the diesel scandal, to be around 10 billion euros ($12.2 billion) and automotive net cash flow of around 6 billion euros for the year.
The key financial figures for 2020, as well as the official guidance for the auto giant will be disclosed by the end of February.
The coronavirus pandemic had caused severe wreckage in the auto sector in the latter half of the first quarter and second quarters of 2020, amid factory closures, low footfall at dealerships and supply-chain distortions. Due to the pandemic-fueled sales slump, the Germany-based auto biggie incurred a loss of 1.4 billion euros ($1.7 billion) in the first six months of 2020.
Nonetheless, Volkswagen managed to come out quite strong in the second half of 2020 and swung back to profitability in the third quarter. In fact, defying all odds posed by the coronavirus mayhem, the delivery count for the automaker continued to recover steadily in the fourth quarter and outpaced the deliveries of the third. A rebound in premium car sales in China, the world’s largest car market, also buoyed the company’s profits in the latter half of 2020. Per European Automobile Manufacturers’ Association, sales at Volkswagen increased 1.7% last December, at a time when new car registrations in Europe dropped nearly 4%.
Also, Volkswagen’s truck making arm, Traton SE, estimates a full-year adjusted operating profit of 135 million euros.
Headwinds Ahead
Volkswagen continues to battle challenges posed by the pandemic. The pandemic has triggered a global shortage of semiconductors in the auto sector, which is being a speed-bump for automotive sales. As a result, Volkswagen has slowed down production at its factories in China, Europe and North America, in order to adapt to the supply situation in the first quarter of 2021. Further, the automaker as well as German auto-parts suppliers, like Robert Bosch and Continental, believe the supply issue could prevail through 2021, making it yet another tough year.
Having said that, Volkswagen is continuously reviewing countermeasures in a bid to limit the adversities and the number of vehicles affected by the supply-chain bottleneck, and ensure that smooth vehicle deliveries can be resumed as soon as possible.
Volkswagen also faces intense competition in the electrified car space from the electric vehicle behemoth Tesla (TSLA - Free Report) . Also, the mega merger of Fiat Chrysler Automobiles and PSA Group to create the world’s fourth-biggest automaker Stellantis has further magnified the pressure faced by Volkswagen.
Apart from these, Volkswagen has been slapped a steep fine of more than 100 million euros ($121 million) for narrowly missing compliance with the EU targets on carbon dioxide (CO2) emissions with regard to its 2020 passenger car line-up.
Shares of the company have appreciated 16.6% in the past year compared with the industry’s rise of 48.4%.
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Volkswagen (VWAGY) Reports Robust Preliminary Figures for 2020
Volkswagen AG (VWAGY - Free Report) recently reported stellar full-year 2020 preliminary figures. The company projects operating profit, excluding costs related to the diesel scandal, to be around 10 billion euros ($12.2 billion) and automotive net cash flow of around 6 billion euros for the year.
The key financial figures for 2020, as well as the official guidance for the auto giant will be disclosed by the end of February.
The coronavirus pandemic had caused severe wreckage in the auto sector in the latter half of the first quarter and second quarters of 2020, amid factory closures, low footfall at dealerships and supply-chain distortions. Due to the pandemic-fueled sales slump, the Germany-based auto biggie incurred a loss of 1.4 billion euros ($1.7 billion) in the first six months of 2020.
Nonetheless, Volkswagen managed to come out quite strong in the second half of 2020 and swung back to profitability in the third quarter. In fact, defying all odds posed by the coronavirus mayhem, the delivery count for the automaker continued to recover steadily in the fourth quarter and outpaced the deliveries of the third. A rebound in premium car sales in China, the world’s largest car market, also buoyed the company’s profits in the latter half of 2020. Per European Automobile Manufacturers’ Association, sales at Volkswagen increased 1.7% last December, at a time when new car registrations in Europe dropped nearly 4%.
Also, Volkswagen’s truck making arm, Traton SE, estimates a full-year adjusted operating profit of 135 million euros.
Headwinds Ahead
Volkswagen continues to battle challenges posed by the pandemic. The pandemic has triggered a global shortage of semiconductors in the auto sector, which is being a speed-bump for automotive sales. As a result, Volkswagen has slowed down production at its factories in China, Europe and North America, in order to adapt to the supply situation in the first quarter of 2021. Further, the automaker as well as German auto-parts suppliers, like Robert Bosch and Continental, believe the supply issue could prevail through 2021, making it yet another tough year.
Having said that, Volkswagen is continuously reviewing countermeasures in a bid to limit the adversities and the number of vehicles affected by the supply-chain bottleneck, and ensure that smooth vehicle deliveries can be resumed as soon as possible.
Volkswagen also faces intense competition in the electrified car space from the electric vehicle behemoth Tesla (TSLA - Free Report) . Also, the mega merger of Fiat Chrysler Automobiles and PSA Group to create the world’s fourth-biggest automaker Stellantis has further magnified the pressure faced by Volkswagen.
Apart from these, Volkswagen has been slapped a steep fine of more than 100 million euros ($121 million) for narrowly missing compliance with the EU targets on carbon dioxide (CO2) emissions with regard to its 2020 passenger car line-up.
Volkswagen currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of the company have appreciated 16.6% in the past year compared with the industry’s rise of 48.4%.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>