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Volkswagen Drops on Report Over Missing Profit Targets

Sept. 19 (Bloomberg) -- Volkswagen AG dropped as much as 3.3 percent after Manager Magazin said Europe’s largest automaker may miss profit goals as costs climb and sales growth slows. The German vehicle manufacturer denied the report.

VW, the biggest decliner today in the 14-member Eurostoxx autos and parts index, fell as much as 6.05 euros to 175 euros and was down 2 percent at 4:58 p.m. in Frankfurt. Trading volume was more than triple the three-month daily average.

Chief Financial Officer Hans Dieter Poetsch is concerned that the automaker won’t meet 2015 targets and is looking to cut costs by about 1,000 euros ($1,355) per vehicle, the German monthly magazine reported today, without citing the source of the information.

“The suggestion that Volkswagen isn’t committed to its targets is false,” the Wolfsburg-based carmaker said in an e-mailed statement. “Volkswagen completely stands behind its statements about the future development of the company.”

Volkswagen has budgeted investments of 50.2 billion euros in the automotive division through 2015 to help it surpass General Motors Co. and Toyota Motor Corp. as the world’s biggest automaker by 2018. The company has a target of generating pretax profit equivalent to at least 8 percent of sales by 2018 as well.

‘Difficult Phase’

“The trends show VW heading for a difficult phase for the first time in years,” and the Manager Magazin report reinforces that, said Juergen Pieper, an analyst with Bankhaus Metzler in Frankfurt. The sales momentum in the past two months has become “clearly weaker.”

The VW car brand, the manufacturer’s biggest unit by vehicle sales, is forecast to lift its operating margin to more than 6 percent of revenue from 3.5 percent last year, according to a Sept. 9 presentation by Poetsch. The Seat division, which posted an operating loss of 156 million euros last year, has a target margin of more than 5 percent. The Skoda nameplate will have a margin of 6 percent to 8 percent, after posting 6.8 percent in 2012. The presentation didn’t give a time frame for reaching the goals.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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