Volkswagen earned $ 12 billion in 2020, despite the pandemic

Volkswagen earned $ 12 billion in 2020, despite the pandemic

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The world’s largest automaker said in a statement on Friday that it expects an operating profit of € 10 billion ($ 12.2 billion) for 2020, a performance helped by a good end of the year.
After losing € 1.4 billion ($ 1.7 billion) in the first six months of 2020, Volkswagen (VLKAF) “proved to be quite robust in the second half,” he added. Fourth-quarter deliveries “continued to recover strongly” and exceeded the previous three months.

Volkswagen earned almost twice as much in 2019, posting a profit of € 19.3 billion ($ 23.5 billion) in sales of € 252 billion ($ 306.6 billion). But the company’s stock jumped up to 6% in Frankfurt on Friday, suggesting that investors expected an even more abrupt drop in profits.

The automakers suffered a sales collapse and supply chain disruptions during the first months of the pandemic. They now face a critical semiconductor shortage that threatens to hamper production as the industry tries to return to the market.

Volkswagen had to adapt production at plants in China, North America and Europe this quarter and could lose 100,000 units, or about 4% of global quarterly production, as a result of component shortages, according to UBS analysts.

The German automaker, which also owns the Audi and Porsche brands, said last week that it “slightly expanded” its share of the world passenger car market in 2020. It delivered 9.3 million vehicles, a 15.2% drop in compared to 2019. Deliveries remained better in China, its largest single market, down 9% compared to a 20% drop in Europe.

Deliveries of battery-powered electric vehicles reached 231,600, more than three times the volume in 2019. Deliveries of plug-in hybrids increased 175% to 190,500 units.

It seems that traditional automakers “can manage the transition to electric mobility much better than they feared,” Bernstein senior analyst Arndt Ellinghorst said in a note to customers on Friday. “Investors need to wake up to the excessively low valuation of traditional automakers, especially in the context of evaluating everything that is ‘new mobility’,” he added.

Despite making only 500,000 vehicles in 2020, a leader in electric cars Tesla (TSLA) worth $ 800 billion, eight times Volkswagen’s market capitalization.
In his first tweet this week, and perhaps as a sign of growing confidence in the German industrial giant, Volkswagen CEO Herbert Diess mentioned the company’s momentum in electric vehicles, marking Tesla CEO Elon Musk.

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