Volkswagen witnessed a significant downturn in its shares on Friday afternoon following the publication of its preliminary results. These results revealed a nearly flat profit growth for the German automaker in the previous year, along with a forecast of modest sales expansion.
As Europe’s largest automaker, Volkswagen divulged that its operating profit, excluding special items, saw a marginal uptick of 0.3%, reaching €22.6 billion in 2023. This occurred against the backdrop of a 15.5% surge in revenue, which climbed to €322.3 billion. Analysts surveyed by Visible Alpha had predicted a slightly lower adjusted operating profit of €22.19 billion and sales of €316.47 billion, reflecting the market consensus.
One notable aspect of Volkswagen’s financial narrative revolved around the proposed dividend, which corresponded to a payout ratio of 28%. However, this figure fell short of the company’s targeted ambition of achieving a 30% payout ratio. This variance likely fueled investor apprehensions, contributing to the subsequent decline in share value.
Looking ahead, Volkswagen outlined its expectations for the forthcoming year, forecasting revenue growth of up to 5%. Concurrently, the company anticipated an operating margin ranging between 7% and 7.5%. This follows a decrease in the operating margin to 7% in 2023, down from 8.1% in the previous year. According to Visible Alpha’s analyst survey, revenue was projected to reach €318.2 billion in 2024, accompanied by an operating profit of €22.81 billion.
The market’s reaction to Volkswagen’s financial outlook was unmistakable in the decline of the company’s shares, identified by the ticker symbol VOW3, which plummeted by 5%. This represented a significant setback, with the shares having endured an overall 16% drop over the past 52 weeks.
The downward trend of Volkswagen’s shares mirrors the prevailing concerns among investors regarding the company’s ability to meet its financial targets and sustain growth.
Volkswagen’s financial performance in 2023, while showing a slight increase in operating profit and robust revenue growth, has sparked questions and uncertainties among investors. The deviation from the expected adjusted operating profit, along with the shortfall in the proposed dividend payout ratio, has contributed to a cautious market sentiment.
As the automotive giant navigates its path into the future, the market will closely observe whether Volkswagen can recover from this setback and regain investor confidence through its projected revenue growth and operating margin targets for the upcoming year.
