German automaker Volkswagen AG yesterday reported a pretax loss of 1.4 billion euros (US$1.65 billion) for the first half of this year after the COVID-19 pandemic sent sales plummeting.
The sprawling group, which includes the Porsche, Audi and Skoda brands, said that revenue plunged 23 percent to 96.1 billion year-on-year as lockdowns halted production lines and closed showrooms.
The 1.4 billion euros loss marks a steep decline from the 9.6 billion in pretax profit the group earned over the same period last year.
“The first half of 2020 was one of the most challenging in the history of our company due to the COVID-19 pandemic,” Volkswagen chief financial officer Frank Witter said.
Nevertheless, the firm expects to end the year in “positive territory” as many countries relaxed their restrictions during the second quarter, allowing sales to gradually bounce back.
Overall, the group sold 3.9 million vehicles worldwide from January to last month, 27 percent fewer compared with a year earlier.
The biggest slump was recorded in April, at the height of the shutdowns, when sales plummeted 45 percent. A recovery has since got under way, led by a pickup in western European markets, the automaker said.
“Due to the positive trend exhibited in our business over the past few weeks and the introduction of numerous attractive models, we look cautiously optimistic to the second half of the year,” Witter said.
Volkswagen said it planned to cut its dividend for last year from 6.50 euros per ordinary share to 4.80 euros.
Separately, French automaker Renault SA reported its biggest half-year loss ever, with revenue slashed by a third as dealerships worldwide were emptied by the COVID-19 crisis.
The dire results underscored the challenges facing CEO Luca de Meo, who was brought in this month to revamp a company reeling from strategic missteps and the ousting of former CEO Carlos Ghosn last year on financial misconduct charges.
Net losses reached 7.3 billion euros, compared with a profit of 970 million euros in the same period last year.
More than half the loss was due to Renault’s 43 percent stake in its Japanese partner Nissan Motor Co, which this week also reported a huge hit from the COVID-19 pandemic.
Revenue plunged 34 percent to 18.4 billion euros as demand withered for nearly all its brands in all its markets, including the low-cost Dacia models that have been hugely successful in recent years.
The company has warned that overcapacity would require it to close or restructure four production sites in France and cut 15,000 jobs worldwide, and last month it secured a 5 billion euros emergency loan backed by the French government.
“Although the situation is unprecedented, it is not final,” De Meo, a former top Volkswagen executive, said in a statement, confirming that Renault would cut costs by 600 million euros this year, a third of the total targeted by 2022.
“We’re currently touching the bottom of a negative curb that started several years ago,” De Meo said in a conference call with analysts yesterday, adding that he would lay out his recovery plan by January.
“We know what we have to do... We will move the whole system from volume to value,” he said, adding that “a lot will happen in this house in the next six months.”
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