BERLIN (Reuters) -Volkswagen on Thursday warned that its cost cutting period was not over and would last beyond the second half of 2024, as its second-quarter operating profit fell amid higher costs.
The German carmaker is in the midst of a 10 billion euros ($10.83 billion) savings drive announced last December, with cuts of up to 4 billion euros due in 2024.
Volkswagen (ETR:)’s second-quarter earnings before interest and taxes came in at 5.46 billion euros, from 5.6 billion euros in the previous year.
The company’s results were also dented by costs related to a possible closure of an Audi plant in Brussels, lower sales in China and expenses linked to deconsolidating VW Bank Russia.
The carmaker had slashed its outlook for operating return in sales in mid-July to 6.5%-7% from 7%-7.5%.
“A return of 6.3% after six months is too low,” Chief Financial Officer Arno Antlitz said in a statement. “We will have to make significant cost-cutting efforts in the second half of the year and beyond in order to achieve our goals.”
Volkswagen is revamping its line-up globally with bespoke EV models in particular for the Chinese and U.S. markets, in an attempt to defend market share in China, maintain its share in Europe and grow in the United States.
The carmaker is one of several legacy firms who have called for patience as they improve their product offerings to stay relevant, even as European and U.S. regulators attempt to keep new and cheaper Chinese EVs out of their markets with tariffs.
Antlitz had said in April that he expected rising orders to have a positive impact on second-quarter results, after the carmaker reported a 20% drop in profits in the first quarter.
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