BERLIN–Volkswagen AG (VOW.XE), Germany’s largest car maker, reports second-quarter earnings before markets open on Thursday. Here are a few things to watch:
RESULTS: Net earnings are expected to rise sharply to 3.48 billion euros ($4.05 billion) from EUR1.16 billion a year earlier, largely due to one-off charges in the previous year to cover costs related to the Diesel scandal, according to a Dow Jones News analysts’ poll.
Analysts expect Volkswagen to report EUR59.7 billion in revenue, up from EUR56.97 billion a year ago as it continues to claw back market share lost in the wake of the emissions scandal.
WHAT TO WATCH:
POTENTIAL EARNINGS BEAT: Analysts at Evercore ISI think Volkswagen could surprise market expectations due in part to a recovery in sales. The analysts expect the firm to report revenue of EUR60.17 billion, with earnings before interest and taxes of EUR4.70 billion.
CARTEL: The European Commission said last weekend that Volkswagen had asked the region’s antitrust watchdog to scrutinize possible coordination efforts by the country’s main car makers. The commission said it was assessing the matter, adding that it was premature to speculate further–analysts are on the prowl for further information or comment from the company.
The company’s supervisory board on Wednesday held an extraordinary meeting to discuss the matter.
OPERATING MARGIN: The guidance for an operating margin of 6%-7% is somewhat conservative, according to analysts at Equinet, who expect the firm to eventually report a 7.1% margin for 2017. Volkswagen is unlikely to tweak the guidance at this stage, the analysts said.
MOST RECENT GUIDANCE: In its first quarter report, Volkswagen gave the following guidance:
“Volkswagen Group is confirming its outlook for 2017 after a strong first quarter. The group therefore expects sales revenue for the full year to grow by up to 4% year-on-year.”
It said that in terms of the group’s operating profit, an operating return on sales of between 6% and 7% is forecast for 2017. “Challenges will arise particularly from the economic situation, intense competition in the market, exchange rate volatility and the diesel issue,” it said.
-Write to William Wilkes at email@example.com