This topic discusses Volkswagen’s Q4 2023 earnings expectations and results. The earnings results of its competitors will also be discussed here. You can find an article on the earnings in the wiki:
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Tesla Q4 2023 revenue grew by 3% y/y to $25.17 billion (estimate: $25.87 billion), automotive revenue rose by 1% y/y to $21.5 billion (estimate: $21.7 billion), adjusted income fell by 39% y/y to $2.49 billion (estimate: $2.61 billion) due to a number of factors including reduced vehicle average selling price (ASP) due to pricing and mix, increased in operating expenses and the cost of Cybertuck production ramp.
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In the earnings call, Elon Musk said Chinese car companies will likely demolish other automakers.
“Our observation is generally that the Chinese car companies are the most competitive car companies in the world. So I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established. Frankly, I think if there are not trade barriers established, they will pretty much demolish most other car companies in the world.”
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Volkswagen’s Q4 2023 revenue rose by 14.5% y/y to 87.2 billion euros, above analysts estimate of 81.8 billion euros (+7.2%) and management upper guidance of 85.9 billion euros (+10%) while its operating margin was 7.3% above analysts’ estimate of 7.05%.
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Volkswagen is guiding 2024 revenue to grow by 5% y/y to 338.4 billion euros, above analysts’ estimate of 317.1 billion euros (-1.6% y/y) and operating margin to range between 7% and 7.5% (analysts’ estimate: 6.9%, 2023:7.0%).
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The company is also guiding 2024 automotive net cashflow of between EUR 4.5 and EUR 6.5 billion, the midpoint representing a decline of 48.6% y/y due to investments for the future and mergers and acquisitions for its battery business (2023: EUR 10.7 billion).
"We are confident about 2024, despite the muted economic outlook and intense competition. On that basis, we will consistently drive the transformation of the Volkswagen Group forward. We expect a tailwind from a large number of new product launches, a positive trend in product costs and continued cost discipline. Our flexibility is our strength: we are continuing to invest in the electrification and digitalization of our product range, while simultaneously keeping our combustion vehicles competitive during the transition phase,” Arno Antlitz, CFO & COO Volkswagen Group said.
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I thought VW reported later on.
Is the negative reaction due to the cash flow situation?
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- Buy, €130: Berenberg analyst, Romain Gourvil praised Volswagen’s 2023 results and 2024 outlook, which comfortably exceeded expectations. However, he thinks the lower-than expected outlook for net cash flow could be the trigger for weak price reaction to the numbers [1].
- Outperform, €146 : RBC analyst, Tom Narayan said Volkswagen’s free cash inflow outlook appears weak compared to expectations [2].
- Neutral, €128: JP Morgan analyst, Jose Asumendi described the company’s outlook as cautious but consistent with the current environment in the automotive industry and its strong product cycle [3].
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- Buy, €150: Jefferies analyst Philippe Houchois said Volkswagen remains a turnaround story with little cash outflow but its margin outlook doesn’t show the incentive hoped for from its savings program [1].
- Overweight, €135: Barclays analyst Henning Cosman said Volkswagen’s 2024 outlook was not as good as hoped [2].
- Sale, €100: UBS analyst, Patrick Hummel is against Volkswagen’s increasing investments in uncertain areas instead of distributing more dividends to shareholders [3].
- Buy, €180: Deutsche Bank analyst, Tim Rokossa thinks Volkswagen was a victim of overly optimistic expectations [4].
Philippe Houchois and Jose Asumendi top my ranking of Volkswagen’s most credible analysts [5].
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Porche is guiding 2024 revenue of between 40 to 42 billion euros (+ 0.7% at the midpoint) versus 40.9 billion euros estimate and operating margin of between 15% and 17%, lower than 17.4% estimate and compared to 18% in 2023.
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Porsche maintained its medium-term and long-term operating margin outlook of 17%-19% and more than 20%, respectively.
“In particular, reduced vehicle sales, regional and model-related shifts in sales, the continuing high cost level for the supply of parts as well as rising depreciation and amortization due to extensive investments and higher personnel costs and non-personal costs caused by inflation make it necessary to reduce the forecast for the operating return on sales compared to the reporting year,” Porsche said in its annual report.
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Porche plans to launch four new models this year; the Panamera, Macan, Taycan and 911 model, marking 2024 the the biggest year of product launches in its history.
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Wild trading session for Porsche stock. It was down 6% this morning and is now almost up 9%.
Do you have a take why it is up that much?
Probably due to the announced new models and the fact that the company kept its medium-term operating margin target.
Also, Porche increased its dividend to 2.30 EUR from1 EUR last year.
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- Volkswagen Group said it expects its order book in Western Europe to pick up speed in the coming months compared to the previous year due to a number of new product launches.
- The company said it has successfully launched its all-electric premium platform (PPE).
- It added that the operating margin of its Brand Group Core improved to 5.3% from 3.6% in 2022, representing addition of more than 3 billion euros in operating profit before special items, mainly due to the strong increase in sales (+21% y/y).
- Operating margin of its Brand Group Progressive (Audi, Lamborghini, Bentley, Ducati) fell to 9% from 12.3% due to valuation effects associated with commodity hedging of -1.4 billion euros. Adjusted operating margin rose to 11% from 10.6%.
- Financial services operating profit was 3.8 billion euros, a third the previous year’s level due to normalisation of used car prices.
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Here are the main insights from Volkswagen’s conference call;
- Volkswagen said its Q1 results will likely be lower than the overall guidance for 2024 due to the current supply headwinds facing Audi and the new product launches.
- Volkswagen expects 2024 deliveries to grow by 3% (2023:+12%) due to tougher competition and supply chain problems.
- Volkswagen said it’s willing to give up market share in China between now and 2026 and guided for proportionate operating profit of its China joint ventures of between 1.5 billion and 2 billion euros (2023: 2.6 billion euros).
- It pointed out that volume was the main contributor for sales growth in 2023.
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