Volkswagen (ETR:VOWG_p), the German multinational automotive manufacturer, reported a robust 21.5% increase in its revenue for the first quarter of this year on Thursday. The rise was primarily driven by higher prices and strong growth in Europe and North America. However, the operating profit fell to 5.7 billion euros from 8 billion euros last year due to the absence of commodity hedging in the current period.
The revenue for the quarter stood at an impressive 76 billion euros ($84.22 billion), beating the expectations of five analysts polled by Refinitiv SmartEstimate, who predicted 5.48 billion euros. Despite the fall in operating profit, the company still recorded a 35% surge in operating profit to 7.1 billion euros, excluding the valuation effect from commodity hedging, and achieved a margin of 9.3%.
The carmaker’s software unit, Cariad, however, reported a loss of 400 million euros, adding to the company’s woes. Meanwhile, Porsche, Volkswagen’s subsidiary, reported a steady return on sales of 18.2%, attributed in part to higher costs, despite the jump in revenues and profits.
The strong growth in Europe and North America played a crucial role in driving the group revenue upwards. In Western Europe, the order book totalled 1.8 million vehicles, including 260,000 battery-electric cars. The total deliveries in the first quarter surged by 7.5% compared to the previous year, while March deliveries were 23.9% higher than the same month last year. These figures are in line with BMW, which also reported higher deliveries that month. However, Volkswagen’s deliveries in China declined by 14.5% in the quarter, but the company remains optimistic that it can recover throughout the year with the broadened model offering and China-specific technology.
Volkswagen confirmed its outlook for 2023 and will present a strategy update at a capital markets day on June 21. It is evident from the first-quarter results that Volkswagen has made considerable progress in its goal to dominate the global electric vehicle market. The company’s impressive sales figures in the Western regions and its confidence in the Chinese market’s recovery are significant milestones in achieving this goal.
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