VW expects a drop in the first quarter earnings, as the European market enters its sixth year of declines.
Chief Financial Officer Hans Dieter Poetsch said that profit during the first three months of the year will be ‘clearly below’. Last year VW managed to make up for the loss in Europe with increased sales in Russia, North America and China, but the drop on the continent this year is expected to deepen, analysts’ expecting a 5% shrink.
“The situation in Europe won’t get easier this year,” Fairesearch analyst Hans-Peter Wodniok said via telephone.
Last week the German automaker announced it expects 2013 operating profit to be at the same level as the one last year, when earnings before interest increased 2.1% to 11.5 billion euro. Recently, Moody’s changed its forecast for European light vehicle sales from a 3% decline to a 5% decline. In January new-car registrations in Europe reached the lowest level for the month since 1990, according to ACEA auto-industry association.
“This is mainly due to weaker-than-expected demand in northern European countries, especially Germany and the U.K., and the absence of a recovery in southern Europe,” Moody’s analyst Falk Frey said in a report.