Volkswagen Q3 2017 Earnings Preview

by Trefis Team
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Volkswagen AG (OTCMKTS:VLKAY) will announce its results for the nine months ended September 2017 on October 27th 2017 and after an impressive performance in the first half of the year, we expect strong results in the first nine months of the year. Based on its recent performance the company raised its revenue guidance for 2017 and expects a 4% year on year growth in revenues. Operating returns on sales are expected to be around 6% to 7%. Despite the dieselgate scandal and allegations of collusion with other German car makers, Volkswagen’s operating profit more than doubled in Q2 2017 and we expect this strong performance to continue in Q3 2017.

Strong Sales Continue Throughout Q3 2017:

Volkswagen has reported strong sales numbers for all three months of Q3 2017 across brands. Below is a summary of the company’s performance in the first nine months of the year :

Source: Volkswagen Release

From the above table, it can be seen that Volkswagen is witnessing strong growth in Central and Eastern Europe and South America. Sales in Asia Pacific (especially China) and the USA also remain strong. Weakness in Western Europe continues due to slow performance in Germany.

Key Trends:

Focus On Emerging Markets: As it looks to capture a greater market share in the fast expanding emerging markets, Volkswagen is looking to manufacture economical vehicles in India, using the expertise of its Skoda brand. (Read Here’s How Volkswagen Plans To Grow In Emerging Markets).

Strategy 2025: As all automakers look to adapt to the changing landscape of the automobile industry, Volkswagen has chalked out its Strategy 2025 aimed towards becoming the “globally leading provider of sustainable mobility.”  This strategic roadmap aims at expanding the company’s SUV portfolio (the segment is growing rapidly) by adding 20 more models by 2020 and the development of electrified models. The company also plans to launch more than 30 new electric models by 2025.

Volkswagen does appear to be “scandal proof” and we believe the company is well poised to report another strong quarter.

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