Investing.com -- Shares of Volkswagen (ETR:VOWG) fell on Thursday following the company's announcement that its cost-cutting period will extend beyond the second half of 2024.
The company’s operating result decreased to €10.1 billion from €11.3 billion in H1 2023, impacted by non-operating factors such as severance programs and business closures.
The company is implementing a 10 billion euro ($10.83 billion) savings plan, with up to 4 billion euros in cuts planned for 2024.
“A margin of 6.3% after six months is below our ambitions and potential, given our array of great vehicles, our brand portfolio, and our global footprint,” said Arno Antlitz, Volkswagen’s CFO and COO in a statement.
However, revenue increased to €158.8 billion, up from €156.3 billion in H1 2023, primarily driven by strong performance in Financial Services.
Volkswagen's Automotive division faced a cash outflow of €0.1 billion due to increased investment in new models and supply chain challenges.
Vehicle sales dipped slightly, but growth in North and South America offset declines elsewhere. In Western Europe, the demand for electric vehicles has increased order intake.
Additionally, the company has made significant progress in its strategic initiatives, including advancements in software development and key product programs.
Volkswagen Group confirmed its full-year outlook, expecting sales revenue growth of up to 5% and an operating return on sales between 6.5% and 7%.
The company plans to invest between 13.5% and 14.5% in the Automotive Division and expects automotive net cash flow to be between €2.5 billion and €4.5 billion.