Investing.com -- Volkswagen (ETR:VOWG_p) shares rose more than 1% in Europe after the company offered a trading update for the fiscal year 2024 (FY24) ahead of its earnings report on March 11.
According to Bernstein analysts, the tone of Rolf Woller, Volkswagen’s Head of Treasury and Investor Relations, was more optimistic than that of Porsche AG (ETR:P911_p), which held its call a day earlier.
Volkswagen's orderbook in Western Europe has reached approximately 850,000 units, which is slightly higher than pre-COVID levels and represents over three months of orders. Battery Electric Vehicles (BEVs) make up 170,000 units of this order intake, showing stability quarter over quarter and a significant year-over-year increase.
The German carmaker sold 745,000 BEVs in 2024, which amounted to 8.3% of total deliveries, short of its 9-11% target. However, BEVs now constitute 21% of the total orderbook for West Europe, “which gives an element of confidence into 2025,” Bernstein analysts said.
The company's fourth-quarter 2024 revenue and operating profit consensus, as per Visible Alpha, is €82.8 billion and €4.7 billion respectively, with a 5.7% margin. These figures are just below the company's own guidance for the fiscal year, which forecasts €320 billion in revenues and €18 billion in operating profit.
Volkswagen described the consensus earnings per share (EPS) of €21.8 as a “reasonable assessment.”
During the briefing, the company also reiterated its commitment to increasing the free float of its Traton division but emphasized that it would be mindful of valuation, without providing specifics on the timing or size of the potential stake sale.
Moreover, Volkswagen said it expects a €1.5 billion headwind in 2025 due to CO2 compliance challenges.
“This will be influenced by the powertrain mix, so not only from potential penalties for falling short of its target but also from selling a higher number of lower contribution BEVs at the expense of higher contribution ICE (NYSE:ICE) vehicles,” analysts led by Stephen Reitman continued.
Lastly, Bernstein’s team said Volkswagen’s recent union agreement is not expected to significantly impact 2024.
The company now sees its 6% margin target for the VW brand as more realistic in the 'medium-term.'
The agreement includes personnel cost savings of €1.5 billion annually until 2030, a reduction in technical capacity in Germany by around 730,000 units, and a socially responsible reduction of the workforce by more than 35,000 by 2030, with no forced redundancies. Approximately 24,000 of these reductions will be achieved through natural attrition and early retirement.
Volkswagen expects mid-term cost benefits exceeding €4 billion and cumulative cost benefits of more than €15 billion by 2030.