The executive board of Volkswagen AG has revealed that the full year outlook for 2020 – announced during its 2019 annual report – can no longer be achieved, with business severely impacted by the ongoing Covid-19 pandemic. In a statement, it said the automotive retail network has “largely come to a standstill.”
It’s currently not possible to determine when a new outlook can be made for the full year, the automaker added. This is due to the drop in customer demand and supplier bottlenecks, which have led to production stops within the Volkswagen Group. These factors are also reasons why a new outlook cannot be accurately forecasted for now.
However, based on preliminary figures, Volkswagen expects its Q1 2020 sales revenue to be around 55 billion euros (RM260.7 billion), operating profit of 0.9 billion euros (RM4.27 billion), and a return on sales margin of around 1.6%. Irregular pricing for raw material, turbulent financial markets, and weakening currency also burdened the company’s first quarter result by 1.3 billion euros (RM6.16 billion).
Furthermore, its automotive net cash flow amounted to negative 2.5 billion euros (RM11.85 billion), due to weaker underlying operating result and negative effects in working capital from higher inventories and lower liabilities. Its automotive net liquidity amounted to 17.8 billion euros (RM84.4 billion).
In light of this, the Volkswagen Group has begun an extensive cost-cutting measure. Securing liquidity is its highest priority, and it’s working on optimising working capital as well as prioritising investments. The company is looking to restart production in phases, too.
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In simple terms they gonna close shop for a year.