Volkswagen Group (XETRA:VOW) shares took a hit on Monday after the manufacturer hinted margins would be tighter than anticipated at the full-year stage last Friday.
Having hedged against rising raw material prices, Volkswagen said it had suffered a €2.5 billion (£2.18 billion) non-cash loss which is not likely to be recoverable by the year end.
This means margins will be between 7.0% and 7.3% for the year, rather than the previously indicated 7.5% to 8.5%, a surprise post-close statement on Friday read.
Operating profit will likely stay flat year on year at around €22.5 billion a result, the group added.
“The further development of the commodity markets remains unpredictable,” the statement read.
“The company does no longer expect to be able to compensate for the effects of €2.5 billion accounted for in the first nine months by the end of the year.”
Volkswagen also pointed to flooding in Slovenia which hit supply lines, prompting an increase in parts costs.
Stifel analysts highlighted third-quarter cash flow of €2.5 billion as better than expected however, alongside revenue of €78.8 billion, but raised questions over the statement.
“The ad-hoc release is rather confusing to us,” the bank said, “revenues are better than expected, earnings before interest and tax much worse, free cash flow much better.”
“The outcome is different from the message in the pre-close call, too.
“The negative interpretation would be that VW has very little transparency on what is going on. That would also give little credibility to the full-year guidance.”
Shares in the German automaker slipped 2% on Monday to €101.16, having sunk to levels not seen since the pandemic earlier in the day.