Volkswagen ups margin target again on record earnings



© Reuters. FILE PHOTO: A technical employee works at the production line for the electric Volkswagen model ID. 4, in Zwickau, Germany, September 18, 2020. Picture taken September 18. REUTERS/Matthias Rietschel/File Photo

By Christoph Steitz and Jan Schwartz

FRANKFURT (Reuters) -Europe’s largest carmaker Volkswagen (DE:) on Thursday raised its profit margin target for the second time in less than three months, pointing to record earnings in the first half of 2021 that even blew past pre-pandemic levels.

The company said it now expected an operating return on sales of 6.0-7.5%, having previously guided for 5.5-7%.

First-half operating profit before special items reached 11.4 billion euros ($13.5 billion), above the 10 billion euros achieved in 2019, before the coronavirus pandemic wreaked havoc in the global economy.

“We’re keeping up our high pace, both operationally and strategically,” Chief Executive Herbert Diess said in a statement, published only hours after the carmaker, along with partners, launched a bid for French-listed Europcar.

“Our electric offensive is picking up momentum and we will keep on increasing its pace in the months to come,” said Diess, who aims for Volkswagen to overtake Tesla as the world’s largest electric vehicle player by the middle of the decade.

The global car sector has been hit by a shortage of crucial semiconductors, with numerous rivals, including Daimler, BMW and GM, adjusting or halting production.

“The risk of bottlenecks and disruption in the supply of semiconductor components has intensified throughout the industry,” Volkswagen said, lowering the outlook for deliveries to customers.

It now expects deliveries to be up noticeably in 2021 from the 9.3 million last year, having previously expected them to rise “significantly.”

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($1 = 0.8433 euros)

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