Volkswagen

Volkswagen Prelim Q1 revenue at €78bn (up 3% YoY), with EBIT at c €2.8bn (down 40% YoY), 30% below the €4bn consensus. EBIT margin at 3.6% (down 250bps yoy), below the 5% consensus and the group’s target of 5.5-6.5%. Several factors negatively impacted performance, including €600m in provisions related to CO₂ regulations in Europe, €200m for restructuring measures at CARIAD, and a total of around €300m from adjustments to provisions for the diesel issue and the valuation of vehicles in transit due to the import duties introduced in the United States at the beginning of April. Net liquidity is expected to stand at €33bn. 

FY25 guidance was maintained but says it doesn’t include potential impact of tariffs in the US because “the effects and their interactions cannot be conclusively assessed at present.” The outlook includes revenue growth of up to 5%, a return on sales of 5.5-6.5%, free cash flow between €2-5bn, and net liquidity between €34-37bn.

Q1 is bad and below expectations. The guidance maintained is a fiction. Considering the current environment there is no reason to be brave and buy Volkswagen or any stock in the sector, as highlighted by the pre-close call of Michelin or the cost cutting plan of STM. 

Indeed, Michelin held its pre-close call with a bearish tone with weaker than expected volumes: down 6-8% YoY, significantly below the 2.6% consensus, weighed down by weak OE demand. Regarding the US, over 70% of Michelin’s US sales are locally produced, with 15% from Canada & 5% from Mexico. USMCA products likely exempt from the 25% tariff set for May 3rd but currently unclear. But here again, Michelin is waiting for details from the US government to update its guidance and may do so at the Q1 earnings.