The Volkswagen logo is seen on the bonnet of a vintage Beetle car.
Photograph by Manjunath Kiran/AFP/Getty Images
Volkswagen stock slipped into reverse early on Thursday, as the German automobile giant posted solid earnings and strong electric-vehicle sales but warned the impact of the chip shortage was set to worsen.
The Frankfurt-listed stock fell 2.3% to €212.95 in early trading.
The car manufacturer, whose brands include Audi, Porsche and Bentley, posted net profit of €3.4 billion ($4.1 billion) in the first quarter, up from €517 million in the year-ago period, which was heavily affected by the Covid-19 pandemic. Operating profit of €4.8 billion comfortably beat the FactSet analyst consensus of €4.3 billion.
Sales grew 13.3% to €62.4 billion, beating estimates of €61.9 billion, which the company said was driven by the recovery in China, the group’s largest market, and stronger demand for higher-margin luxury models.
Deliveries grew 21% to 2.4 million vehicles, while sales of electric vehicles more than doubled to 133,300. Volkswagen’s EV deliveries were made up of 59,900 battery-electric vehicles (BEV) and 73,400 plug-in hybrid electric vehicles (PHEV).
The company unveiled ambitious new electrification targets in March, including plans to build six new battery factories by 2030. It also predicts 70% of its European sales will be from electrified cars by 2030. Those goals provided a power surge to the stock, which is now 39.7% up year-to-date.
Read:Volkswagen Is Coming After Tesla. What It Means for Both Stocks.
“Our e-offensive continues to gain momentum and we are making good progress with the transformation. There is still much more we can achieve in the remainder of the year,” said Chief Executive Herbert Diess in a statement on Thursday.
However, like many of its peers, Volkswagen warned of the impact of the global semiconductor shortage. In March, Diess said the company was unable to build 100,000 cars as a result of the global shortage. Chief financial officer Arno Antlitz said the company had managed the effects of the chip crisis responsibly, but added it would have a “more significant impact” in the second quarter.
Also:The Chip Shortage Is Getting Worse at the Worst Possible Time
Despite the warning, Volkswagen raised its full-year outlook, now expecting an operating return on sales of 5.5% to 7%, up from an earlier forecast of 5% to 6.5%.
Looking ahead. Volkswagen’s EV progress should encourage investors, though there is work to do in the months ahead to reach its target of delivering one million electric vehicles in 2021.
Bernstein senior analyst Arndt Ellinghorst said Volkswagen reported a solid operating performance in the first quarter, but on closer inspection there were some negatives. He said the auto maker’s numbers in China were weak and its spending on research and development was exceptionally high.
UBS analysts seemed happier with the results, noting that the company managed a small beat against high expectations, as well as raising guidance. They had a buy rating on the stock with a target price of €300.
However, the chip shortage, which is affecting the entire industry and many other sectors, is being closely watched by investors. Volkswagen’s assertions that the worst has yet to come will certainly be a concern, at least in the short term.
