Volkswagen AG (ETR: VOW3) have said that their core brand is set to post operating profits this year, after a tough year of trading.
At the end of October, the German firm saw both their sales revenue and profits grow in an update which would have pleased shareholders.
The carmaker said that, between January and September, sales revenue rose by 6.9% year-on-year, amounting to €186.6 billion. Operating profit before special items also increased, jumping 11.2% to €14.8 billion.
However, this optimism was short live as the firm in November saw its shares crash following its confirmed 2019 outlook.
Volkswagen highlighted that in 2020 operating profit will remain between 6.5 and 7.5%.
Frank Witter said: “The Volkswagen Group remains very robust in the face of increasingly difficult economic conditions. However, we will have to apply systematic cost discipline to reach our long-term goals.” Witter concluded “We also confirm our outlook for 2019,”.
Volkswagen joined Nissan in a list of firms who have been pessimistic on their guidance for 2019 amid tough market conditions.
The firm alluded to its cost saving strategies and increased sales of SUV’s, as mentioned by a firms senior manager.
VW’s core brand in 2019 has gained market share and has increased its operating profit substantially, Chief Operating Officer Ralf Brandstaetter said on Wednesday in comments embargoed for Thursday.
He added that the division had increased its shares of SUV’s sold to 42% in the US and 37% in Europe.
Of envisaged cost savings of 3 billion euros (£2.58 billion) by 2020, 2.6 billion euros have been realised at the end of 2019, Brandstaetter said.
“On this basis, we can secure profitability so that we can systematically invest in the electrification and digitisation of our products,” the executive said, referring to both cost cuts and the increased share of SUVs.
Volkswagen have seemed to make a swift recovery after the firm saw their shares dip in November.
At a time where competitors are struggling, including Suzuki who reported a slump in quarterly profit, it seems that VW are doing okay considering market conditions.
Many automotive firms will have to look to shift their business into the electric car scene as well, as Tesla (NASDAQ: TSLA) continues to report strong demand for its environmentally friendly cars and vehicles.
However, for now VW shareholders should be sufficed and hope that the firm can continue this renewed optimism through to 2020.
Shares of VW trade at €177, (-1.22%). 19/12/19 13:35BST.
