Volkswagen has slashed its profit outlook and warned of around €10 billion of charges and restructuring costs, sending its shares 5.5% lower in Frankfurt trading.
The German carmaker now expects an operating return on sales of up to 1%, sharply below its previous forecast of 4.0% to 5.5%.
Volkswagen is taking a €6 billion non-cash impairment against goodwill allocated to Porsche, reflecting weaker expectations for the luxury sports-car business.
A further €2 billion hit to profits is expected from expanded early-retirement schemes, the planned sale of its Osnabrück plant and deteriorating conditions in the Chinese automotive market.
The warning highlights growing pressure on Volkswagen from weaker Chinese demand, restructuring costs and problems at Porsche, materially reducing expected profitability.
For investors, the key concern is the scale of the downgrade: the group is now guiding to margins close to break-even, with restructuring and China likely to remain major earnings risks.
