By Kim Richters
Volkswagen AG on Thursday lifted the full-year outlook for its operating margin after posting an increase in revenue and earnings for the first quarter.
The German car maker said aftertax profit came in at 3.41 billion euros ($4.09 billion) for the first quarter compared with EUR517 million in the same period year-prior when earnings plummeted amid the coronavirus pandemic. Operating profit rose to EUR4.81 billion from EUR904 million, while operating return on sales for this year's quarter was 7.7%.
Volkswagen said the earnings increase was mainly due to higher unit sales, better product mix, positive effects from the valuation of raw material hedges, and the fixed-cost reduction program.
Quarterly revenue rose to EUR62.38 billion from EUR55.05 billion, beating analysts' expectations of EUR62.28 billion, according to estimates recorded by FactSet.
For 2021, Volkswagen said it now expects an operating return on sales between 5.5% and 7.0% compared with a previous guidance range of between 5.0% and 6.5%. Full-year deliveries and revenue are expected to be significantly higher than in 2020.
"Challenges will arise particularly from the economic situation, the increasing intensity of competition, volatile commodity and foreign-exchange markets, securing supply chains, and more stringent emissions-related requirements," the car maker said. It expects the semiconductor shortage to be worse in the second quarter than it has been so far.
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