FRANKFURT — Volkswagen Group slumped to a third-quarter operating loss over costs related to its rigging of diesel emissions tests, its first quarterly deficit in more than 15 years.
The company posted a 3.48 billion-euro ($3.84 billion) third-quarter operating loss, compared with a 3.23 billion-euro profit a year ago.
The cheating scandal accounted 6.7 billion euros in special costs in the third quarter, more than the 6.5 billion euros it originally set aside, VW said today.
The company said sales revenue rose 5.3 percent to 51.49 billion euros.
“The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear,” CEO Matthias Mueller said in a statement.
VW is bracing for costs that analysts have estimated could total from 20 billion euros to as much as 78 billion euros.
Analysts today said VW has so far contained the financial fallout from its emissions cheating as its namesake VW car brand boosted third-quarter margins and provisions to cover fines and recalls rose only moderately.
The VW brand, which faces the biggest impact from years of cheating on diesel emissions, widened its return to 3 percent of sales from 2.8 percent a year ago as operating profit jumped 17 percent.
VW Group’s 29 percent surge in net liquidity, to 27.8 billion euros, as well as the limited rise in provisions for the diesel scandal are positive signs for its ability to weather the crisis, said Sascha Gommel, a Frankfurt-based analyst with Commerzbank. “I expect VW to have a high degree of visibility on what is needed to fix the cars by now, so there would be a high degree of confidence” behind its provisions figure, he said.
Arndt Ellinghorst, Evercore ISI head of global automotive research, said the fact that VW has kept the provision for the scandal unchanged is a positive signal. “Management has had more insight into the potential recall related costs and the fact that the provision hasn’t spiraled materially higher is a good thing,” he said in a note to investors.
VW shares rose the most in three weeks as Mueller said the company has the strength to overcome the scandal. Shares rose as much as 4.2 percent and traded up 3.2 percent to 108.5 euros at 9:38 a.m. in Frankfurt. Volkswagen has lost some 21 billion euros in market capitalization since the scandal became public on Sept. 18.
Lower full-year forecast
The company said full-year operating group profit will come in “significantly below” year-ago levels because of costs related to the emissions scandal. Excluding costs of the diesel scandal, VW still expects its group operating margin to come in between 5.5 percent and 6.5 percent this year, after 6.3 percent in 2014.
VW stuck to its guidance for full-year deliveries to be on a par with last year’s record 10.14 million auto sales.
The company confirmed the third-quarter loss was its first quarterly loss in at least 15 years but, due to accounting changes, was unable to say precisely when the last loss occurred.
VW Group plans to cut investments by 1 billion euros a year at its core division, which accounts for 5 million cars to be recalled. Luxury division Audi, source of about 40 percent of VW group profit, will also cut planned spending.
VW may need to set aside more money for measures to stabilize sales if deliveries take a hit from the scandal, Mueller has said. Steps could include discounts on new cars if owners turn in old models as well as cheap loans and incentives to dealers to buy back older cars.
Group deliveries, which also include premium brands Audi and Porsche, slid 1.5 percent in September to 885,300 cars and fell 3.4 percent in the third quarter to 2.39 million cars, causing VW to drop behind Japanese rival Toyota in nine-month global auto sales charts after clinching the top spot three months earlier.