Volkswagen:Quarterly Results/2023 Q3
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Return to: Earnings Season:2023 Q3
See also: Discussions | Sheet:Volkswagen | Volkswagen: Deliveries/FY2023
Results and earnings call
- Volkswagen now expects FY2023 operating result before special items to be at the same level as last year (22.5 billion euros or 7%-7.3%), down from a range of $ 23.0 billion to $27.3 billion (7.5%-8.5%) previously guided due to negative effects of commodity hedges at the end of Q3[1].
- Volkswagen preliminary results also indicate Q3 2023 revenue grew 12% y/y to 78.8 billion euros (analyst estimate: € 76.26 or +8% y/y) while operating result rose 14% y/y to 4.9 billion euros (6.2%).
- Automotive net cash flow declined 24.2% y/y to 2.5 billion euros, mainly due to tax payments of past periods amounting to 1.5 billion euros.
- The company continues to expect revenue for the full year to grow 10%-15% y/y to between € 307.2 billion and €321.1 billion, and deliveries to be in the range of 9 to 9.5 million vehicles.
- It noted that the hedging loss of 2.5 billion euros recorded in the first half is no longer expected to be compensated by the end of the year.
Read the earnings call summary here: Mindmap
Earnings expectations
Management Guidance
- The management only gave guidance for the full year 2023[2].
FY2023
| Key Items | Lower-point | Y/Y Growth | Mid-point | Y/Y Growth | Upper-point | Y/Y Growth |
|---|---|---|---|---|---|---|
| Revenue | € 307.155 billion | 10% | €314.136 billion | 12.5% | €321.117 billion | 15% |
| Operating return on sales | 7.5% | 8.0% | 8.5% | |||
| Deliveries | 9 million | 8.4% | 9.25 million | 12.1% | 9.5 million | 14.5% |
Analysts estimate
- Volkswagen Group has beaten analyst revenue estimate in the past three quarters[3].
- Revenue growth rate estimate of 8% for Q3 2023 is below the guidance range of 10% to 15% for the full year.
| Key Items | Q3 2023 estimate | Y/Y Growth |
|---|---|---|
| Revenue[3] | 76.261 billion euros | 8% |
| EPS[3] | 7.1 EUR | 109% |
Analysts opinions during the quarter
Below are the analysts opinions centered on topics from September 10 to date.
Industry Performance
- Jefferies expects European automakers to report solid third quarter earnings that support the annual targets[4].
- Bernstein Research expects European automakers to have had a strong third quarter. But expects 2024 to have demand risks[5].
- UBS expects european automakers to deliver solid figures in the quarter, but expects their margins to fall sequentially due to weaker demand[6].
- Goldman Sachs said investors believe European makers are facing subdued sales and price developments, but they are approaching the sector more constructively. The analyst doesn't count Volkswagen as the industry's favorites[7].
Working Capital
- Jefferies expects Volkswagen to indicate reversal in working capital outflow[4].
Delivery numbers
- RBC analyst, Tom Narayan said Volkswagen's delivery numbers grew significantly during third-quarter compared to the previous year, though sequentially, this figure dropped[8].
- Stifel thinks Volkswagen remains a risky recommendation given short-term low demand[9].
- Volkswagen is no longer chasing sales at the expense of costs, Volkswagen management told Berenberg in September[10].
Cost-cuts
- Stifel expects good news from Volkswagen in October or November regarding cost-cuts initiatives[9].
China Business
- Berenberg said that its conversation with Volkswagen management established that its China electric business remains challenging[10].
Volkswagen Price target and rating developments
| Company | Date | Rating | Price target |
|---|---|---|---|
| Jefferies[4] | October 16 | maintained at "buy" | left at 150 euros |
| RBC[8] | October 14 | maintained at "buy" | left at 160 euros |
| Bernstein[5] | October 2 | maintained at "neutral" | left at 120 euros |
| UBS[6] | September 10 | maintained at "sell" | left at 100 euros |
| Stifel[9] | September 22 | raised from "Hold" to "Buy" | left at 149 euros |
| Berenberg[10] | September 20 | maintained at "buy" | left at 130 euros |
Competitor earnings expectations and results
Tesla
- Tesla missed revenue and earnings estimate[11].
- In the earnings call, Elon Musk may have suggested that he plans to double down on his price cut moves. "I just can't emphasize again how important cost is -- it's not an optional thing for most people. It is a necessary thing. We have to make our cars more affordable that people can buy it, " he said[12].
- Musk also sounded an alarm on high interest rates. "I am worried about the high interest rate environment that we're in," he said. "if the macroeconomic conditions are stormy, even if the best ship is still going to have tough times. The weaker ships will sink."
- Tesla's automotive margin was impacted by price cuts of about 25% (according to Cox Automotive) in the quarter. It was also due to underutilization of new factories and an increase in operating costs associated with the CyberTruck.
- Tesla maintained its annual production target of 1.8 million cars[13].
Summary of the results
| Key Items | Q3 2023 | Analysts estimate | Y/Y Growth |
|---|---|---|---|
| Revenue | $23.35 billion | $24.1 billion | 9% |
| Adjusted EPS | $0.66 | $0.73 | |
| Automotive revenue | $19.63 billion | 5% | |
| Automotive margin | 16.3% | 17.5% | |
| Net profit | $1.9 billion | $2.2 billion | -44% |
Implications for Volkswagen
- Reducing margins for Tesla will probably continue to hurt the likes of Volkswagen.
- The economy is less favorable for automotive players like Volkswagen.
References
- ↑ https://www.eqs-news.com/news/adhoc/volkswagen-aktiengesellschaft-volkswagen-ag-publishes-preliminary-key-figures-for-the-statement-as-per-30-september-2023-and-updates-forecast-for-fiscal-year-2023/1922755
- ↑ https://www.volkswagen-group.com/en/press-releases/volkswagen-group-posts-solid-h1-results-and-strengthens-strategic-position-in-china-17440
- ↑ 3.0 3.1 3.2 https://www.finanzen.net/schaetzungen/volkswagen_vz
- ↑ 4.0 4.1 4.2 https://www.finanzen.net/analyse/volkswagen_vw_vz_buy-jefferies__company_inc__914490
- ↑ 5.0 5.1 https://www.finanzen.net/analyse/volkswagen_vw_vz_market_perform-bernstein_research_912298
- ↑ 6.0 6.1 https://www.finanzen.net/analyse/volkswagen_vw_vz_sell-ubs_ag_913394
- ↑ https://www.finanzen.ch/analyse/volkswagen-vw-vz-neutral-910194
- ↑ 8.0 8.1 https://www.finanzen.net/analyse/volkswagen_vw_vz_outperform-rbc_capital_markets_914484
- ↑ 9.0 9.1 9.2 https://www.finanzen.net/nachricht/aktien/analyse-flash-stifel-hebt-volkswagen-vorzuege-auf-buy-ziel-bleibt-149-euro-12850993
- ↑ 10.0 10.1 10.2 https://www.finanzen.net/analyse/volkswagen_vw_vz_buy-joh_berenberg_gossler__co_kg_berenberg_bank__910645
- ↑ https://digitalassets.tesla.com/tesla-contents/image/upload/IR/TSLA-Q3-2023-Update-3.pdf https://www.axios.com/2023/10/18/tesla-earnings-third-quarter-elon-musk https://www.youtube.com/watch?v=5uZMuDYn1QE
- ↑ https://www.fool.com/earnings/call-transcripts/2023/10/18/tesla-tsla-q3-2023-earnings-call-transcript/#:~:text=This%20year%20itself%20we%20have,the%20growth%20in%20megabyte%20deployments.
- ↑ https://ir.tesla.com/press-release/tesla-vehicle-production-deliveries-and-date-financial-results-webcast-third-quarter-2023