Volkswagen Shares Fall – Company Worsens Annual Forecast After Profit Decline

Volkswagen's shares declined on Friday after the German automaker published lower-than-expected operating profit in the second quarter and downgraded its revenue forecast for 2026.

The company's operating profit in the second quarter fell 9.5% and amounted to €3.47 billion. The operating margin was 4.2%, which fell short of analyst forecasts. The market had expected €3.85 billion in profit and a 4.7% margin.

According to Jefferies analysts, one-time factors had a significant impact on results. These included approximately €400 million in charges related to reassessing the residual value of Audi models and €100 million in costs associated with halting ID.4 production in the United States. Part of these effects was offset by a €500 million net positive impact related to tariffs, which included €100 million in recovered duties.

Volkswagen also lowered its 2026 revenue forecast. While the company previously expected revenue growth of 0% to 3%, it now assumes revenue may decline by 3% or remain unchanged. The reasons cited include macroeconomic uncertainty, trade tensions, geopolitical risks, increasing competition, and fluctuations in raw material prices and exchange rates.

At the same time, the company left its operating return on sales forecast unchanged in the range of 4% to 5.5%. According to Jefferies, the midpoint of this forecast still exceeds market consensus by approximately 7%.

The automotive division's net cash flow in the second quarter was €1.2 billion, which exceeded expectations. Analysts believe the company's 2026 free cash flow forecast of €3–6 billion is realistic.

In the first half, Volkswagen's operating profit declined 11.6% and amounted to €5.93 billion, while the operating margin fell from 4.2% to 3.8%. During the same period, the company's revenue remained virtually unchanged at €158.1 billion.

Vehicle sales declined 8.4% and fell to approximately 4 million units. The largest decline was recorded in China, where sales dropped 31.6%, though this was partially offset by growth in South America, Western Europe, and Central and Eastern Europe.

Volkswagen's Chief Financial Officer Arno Antlitz noted that a 3.8% margin remains insufficient for the company and points to the need for additional changes. He stated that against the backdrop of a 20% decline in the Chinese market and Chinese competitors' expansion into Europe, the company's current strategy is no longer adequate.

Nevertheless, Chief Executive Officer Oliver Blume stated that Volkswagen still expects 2026 results to be better compared to the previous year.