Key insights
- Volkswagen AG shares dropped 7.5% after the company slashed its 2026 operating return on sales guidance to up to 1% from 4%-5.5%. Reasons cited include a €6 billion goodwill impairment on Porsche AG, a challenging Chinese market, and additional restructuring expenses. The automaker also expects around €2 billion in further charges in the second half of the year related to early retirement schemes and asset impairments in China. The company maintained its net cash flow guidance.
Investing.com -- Volkswagen AG (ETR:VOW) shares fell 7.5%, extending declines after the company cut its fiscal year 2026 operating return on sales guidance to up to 1%, down from a previous forecast of 4% to 5.5%.
The German automaker cited a goodwill impairment related to Porsche AG, a challenging market environment particularly in China, and additional restructuring expenses as reasons for the reduced outlook. The company now expects group sales revenue of around €315 billion, roughly equivalent to the midpoint of its previous forecast range.
Special effects totaling approximately €10 billion are expected to weigh on operating profit for the financial year, of which €0.9 billion were already reported in the first half of 2026. Adjusted for these special effects, the operating return on sales for the full year 2026 would amount to about 4%.
The forecast adjustment stems primarily from a deteriorating market environment, especially in China, and an accelerated shift in demand toward battery-electric vehicles. This has led to developments falling short of original expectations, particularly for the Audi and Volkswagen Passenger Cars brands.
Volkswagen will recognize a non-cash impairment of around €6 billion on goodwill allocated to the Porsche business segment in the third quarter. This follows updated medium- and long-term assumptions from Porsche AG regarding its enterprise value, including a medium-term corridor of 10% to 15%.
The company also expects additional restructuring expenses from expanded early retirement schemes and the planned sale of Volkswagen Osnabrück GmbH, connected to the "Future of Volkswagen" agreement reached at the end of 2024. Additionally, developments in the Chinese automotive market will lead to non-cash impairments of assets at fully consolidated companies in China. These three effects combined are expected to have a negative impact of around €2 billion in the second half of the year.
Volkswagen maintained its net cash flow guidance for the Automotive Division at €3 billion to €6 billion and net liquidity expectations at €32 billion to €34 billion for 2026.