Volkswagen Group (XETRA:VOW) underlined the depth of its current crisis with a two-third drop in profits and a warning that it needs significant job cuts and closures to turn its fortunes around.
Just two days after unions warned that the German car giant planned to cut three plants and sack thousands of workers, VW said net profit dropped 64% to €1.57 billion in its September quarter while revenue fell 0.5% to €78.5 billion.
Workers have asked for a 7% pay rise with talks set to resume today with management demanding they take a 10% pay cut on top of the restructuring.
VW, which has warned on profits twice already this year, has been hit by sharply lower demand in China where sales so far this year are down by around 12%.
Most of the planned cost cuts are focused on the core VW brand and finance head Arno Antlitz said the latest results illustrated the "urgent need for significant cost reductions and efficiency gains”.
VW added it expects to post full-year profits of around €18 billion, which reassured some analysts as the shares in the Frankfurt-listed group rallied 2% to €90.88.