Volkswagen Stock: Profit Plunges Amid Chinese Market Challenges

Volkswagen shares declined 0.4 percent to €108.50 on XETRA trading, significantly below their 52-week high of €128.60 recorded on April 5, 2024 - a difference of 18.53 percent. The automotive giant recently reported troubling quarterly figures, with earnings per share plummeting to €2.42 compared to €7.76 in the same period last year. Revenue slightly decreased by 0.47 percent to €78.48 billion. Despite this substantial profit drop, Volkswagen plans to maintain its dividend at €9.06 per share, matching last year's payout, though analysts project a reduced dividend of €6.60 for the current fiscal year. The earnings collapse primarily stems from difficulties in the Chinese market and high restructuring costs, reflecting industry-wide challenges affecting German automakers. Analysts have set a median price target of €107.44 for Volkswagen shares.

Porsche's Struggles Compound Parent Company's Woes

The luxury sports car manufacturer Porsche, a Volkswagen subsidiary, has also reported significant financial setbacks, with its profit dropping by 30.3 percent to approximately €3.6 billion. This decline has further pressured the Volkswagen Group's overall performance. Porsche's operating margin fell from 18.0 to 14.1 percent, moving the company further from its long-term target of exceeding 20 percent. The Stuttgart-based carmaker has announced workforce reductions of around 1,900 positions at its main factory and development center, while simultaneously adjusting its strategy to refocus on combustion engines and plug-in hybrids. For 2025, Porsche anticipates even lower returns, projecting an operating margin between 10 and 12 percent.