Volkswagen positive despite profit hit in second quarter

German auto giant Volkswagen said Thursday it had a “robust” first half of the year despite a drop in profits in the second quarter.

Volkswagen said a statement that its profits over the first six month of the year rose by 26 percent to 10.6 billion euros ($10.8 billion). 

By contrast, profits in the second quarter fell to 3.9 billion euros from five billion in 2021. The result was impacted by a 2.4-billion-euro negative effect linked to bets against the changing price of raw materials. “Despite unprecedented global challenges, Volkswagen has demonstrated remarkable financial robustness,” said chief financial officer Arno Antlitz. 

The auto industry was buffeted over the first half of the year by continuing supply bottlenecks for components and coronavirus-related lockdowns in key market China. Volkswagen’s improved result came despite a 14-percent drop in unit sales in the first half of the year.

The figures remained buoyant thanks to “proportionately higher sales in the premium segment,” where margins are bigger, Antlitz said.

Looking ahead, Volkswagen said it expected supply constraints to “ease” in the second half, while a pick-up in sales towards the end of the second quarter “bodes well” for the rest of the year. 

The continuing impact of the war in Ukraine, which has caused interruptions in the supply of components such as wiring harnesses, was difficult to assess “conclusively”, Volkswagen said.

In particular, the threat of a stop to Russian gas deliveries to Europe meant there were “uncertainties regarding energy supply” in its domestic market, it said.

Last week, Volkswagen unexpectedly announced the departure of its chief executive Herbert Diess after four years at the helm, as the German auto giant attempts an ambitious shift towards electric vehicles.