Agency Report –
Shares in German auto giant Volkswagen and its subsidiary Porsche fell sharply on Monday after the luxury carmaker issued a profit warning over the weekend.
Porsche stock was down 7.3% in early trading in Frankfurt, while VW lost 7%.
The downward trend was triggered by Porsche’s announcement late on Friday of additional costs of around €1.8 billion ($2.1 billion) relating to the company’s strategic reorganization.
The operating return is likely to be 2%, chief executive Oliver Blume said, down from the expected 5% to 7% margin.
The sports car manufacturer – which was recently dropped by the top-tier DAX stock market due to its struggles – said it has decided to invest in combustion engines again due to weak demand for electric vehicles.
But the profit warning led parent company Volkswagen and holding company Porsche SE to lower their own earnings forecasts for the year.
Other German car manufacturers were also down in early trading on Monday, with shares at Mercedes-Benz dropping 2.8% and 2.2% at BMW.
According to one trader, the decision was inevitable, while others called the move a major setback for the entire German automotive industry.
Bernstein analyst Stephen Reitman said that investors and Volkswagen were clearly frustrated by Porsche’s attempts to get its problems under control.
