German automaker, Volkswagen announced a significant 42% drop in operating profit for the third quarter of 2024.
The company’s operating profit fell to 2.86 billion euros ($3.1 billion), as third-quarter sales revenues decreased by 0.5% year-on-year to approximately 78.5 billion euros, according to CNBC.
Volkswagen attributed the decline to an 8.3% drop in vehicle sales compared to the same period last year.
Additionally, the company reported net liquidity across the Volkswagen Group at negative 160.6 billion euros at the end of September 2024, a decrease from negative 147.4 billion euros at the end of 2023.
This financial situation highlights ongoing challenges faced by the automaker in the current market landscape.
Volkswagen reported on Wednesday that its results for the first three quarters of 2024 were negatively impacted by higher fixed costs and restructuring efforts, leading to a 21% decline in operating profit compared to the previous year.
Despite these challenges, Volkswagen shares rose 1.8% at 8:19 a.m. London time.
The company’s CFO and COO, Arno Antlitz stated that the performance reflects a “challenging market environment” and emphasized the need for ongoing performance improvement initiatives within the organization.
Volkswagen’s third-quarter results follow a second cut to its 2024 annual outlook last month.
The automaker now expects a profit margin of approximately 5.6% for the year, along with a 0.7% decline in sales to 320 billion euros—figures that remained unchanged on Wednesday.
The company has faced challenges recently, including warnings of potential plant closures in Germany and the cancellation of several labor agreements with local workers in September.
Additionally, Volkswagen announced the termination of its employment protection agreement, which had been in effect for its German workforce since 1994.
On Monday, the Volkswagen works council announced that the company’s management is planning significant pay cuts and layoffs, along with the closure or reduction of all its German plants.
In response, Volkswagen emphasized the necessity of restructuring and stated it would present plans for cost reductions during ongoing negotiations regarding labor agreements, which are also taking place on Wednesday.
“Ahead of the negotiations today, we need to state: the situation is getting more serious,” Volkswagen’s chief negotiator Arne Meiswinkel said on Wednesday.
He noted that current developments in the auto industry in Europe, particularly in Germany, are concerning, as evidenced by the latest figures from both Volkswagen and its competitors.
