In the earnings call;
- Volkswagen said they are in the process of fixing the supply chain situation at Audi and they expect performance to improve in Q2, with significant margin improvement in Q3 henceforth.
- They expect financial performance to improve in Q2 with margin expected to come in-line with the 2024 outlook, though they warned that the 900 million euros severance cost that will be booked in Q2 will lead to a burden in that respect.
- Overall, they expect the second half to be so strong that it compensates for the weakness in Q1 and possible slight miss in Q2, helped by volume improvements at Audi, new model launches, strong order book, improvements in material costs and benefits from core brand efficiencies.
Assessment of the earnings
Though its Q1 2024 results missed my estimates, Volkswagen reiterated a number of positives given in the previous earnings. However, the introduction of the 900 million severance cost makes the full-year guidance less certain compared to some months ago. Also, I don’t like that a large position of the good performance is pegged to the second half. In my opinion, a lot can happen between now and then.