The carmaker posted an operating loss of 5.9 billion euros, against an expected 2.6 billion euro loss, with special items of about 8 billion euros. Revenue fell 6%. Its operating return over nine months was 3.8% before special items.
Volkswagen's headline loss was large. The business underneath it was weak but not collapsing.
The German carmaker reported a third-quarter operating loss of 5.9 billion euros, compared with the 2.6 billion euro loss analysts expected. The result included special items of about 8 billion euros, mainly a writedown of its stake in Porsche. Revenue fell 6% to 75.3 billion euros.
Over the first nine months, Volkswagen's operating return was 3.8% before special items.
Separating the two
Special items of about 8 billion euros, mainly the Porsche writedown, were larger than the entire loss. The Porsche charge on its own has not been reported. Excluding special items of about 8 billion euros, the quarter would have shown an operating profit, by our arithmetic. Writedowns of investments are accounting charges that do not use cash in the quarter, but they do reflect lower expectations for the value of what the company owns.
The 6% revenue decline and a 3.8% return are the operating story. Both are modest for a company of Volkswagen's size.
"We cannot afford to lose any time. We must act quickly and decisively," Volkswagen finance chief Arno Antlitz said in a video statement, according to Reuters.
The reaction
Reuters reported that Volkswagen shares fell about 2% after the report. A market-data quote at about 9:45 a.m. local time showed the preferred shares about 0.4% higher. The two readings carry different timestamps and had not been reconciled at publication.
Contrast with Stellantis
A day earlier, Stellantis rose about 13% after narrowing its losses and beating revenue forecasts, even though it burned 4 billion euros of cash. Volkswagen's loss was larger than expected, but most of the difference came from one accounting item. Investors in both stocks are judging restructuring progress rather than the headline numbers.
Write off the quarter or worry?
The forgiving view: the loss is mostly a non-cash writedown, the underlying business is still profitable before special items, and management is signaling faster action on costs.
The worried view: revenue is falling, a 3.8% return is thin for a capital-intensive business, and a large writedown on Porsche suggests the value of one of the group's prized assets has been marked down sharply.
What to watch
Details of Volkswagen's restructuring program, any further writedowns, fourth-quarter deliveries, and results from BMW and Mercedes-Benz.