Volkswagen cuts guidance after taking $1.5 billion hit from U.S. tariffs in first half

Germany's Volkswagen connected Friday lowered its full-year guidance and reported a crisp driblet successful second-quarter profit, arsenic the car elephantine navigates the disruptive interaction of U.S. tariffs and restructuring costs.

Europe's biggest carmaker posted operating nett of 3.83 cardinal euros ($4.49 billion) for the 3 months done June, down 29% from 5.4 cardinal euros a twelvemonth ago. Analysts had expected second-quarter nett to travel successful astatine 3.94 cardinal euros, according to a Factset-compiled consensus.

Volkswagen reported second-quarter income gross of 80.8 cardinal euros, besides missing expert expectations of 82.2 cardinal euros.

The automaker said the interaction of U.S. tariffs unsocial outgo the institution 1.3 cardinal euros successful the archetypal six months of the year. Restructuring provisions, meanwhile, amounted to 700 cardinal euros implicit the aforesaid period.

Looking ahead, Volkswagen said its 2025 operating instrumentality connected income is present expected to scope betwixt 4% to 5%, down from a erstwhile forecast of 5.5% to 6.5%. Full-year income are expected to travel successful enactment with the level achieved arsenic past year, compared to a emergence of up to 5% previously.

The results travel arsenic Europe's automakers struggle to get to grips with a bid of manufacture challenges, including robust contention from Chinese car brands and U.S. President Donald Trump's import tariffs of 25%.

The automotive assemblage is wide regarded arsenic acutely susceptible to U.S. tariffs, peculiarly fixed the precocious globalization of proviso chains and the dense reliance connected manufacturing operations crossed North America.

"If you look astatine the archetypal fractional of the year, you spot fundamentally a mixed picture," Arno Antlitz, main fiscal serviceman astatine Volkswagen, told CNBC's "Squawk Box Europe" connected Friday.

"First and foremost, you spot tremendous occurrence of our products, some connected the combustion motor broadside and connected the electrical conveyance side. In Europe, each 4th conveyance comes from the Volkswagen Group, but arsenic you said, our numbers are importantly down," helium added.

Volkswagen's CFO said the firm's ramp up of EVs weighed connected margins, noting that margins for EVs are little compared to planetary combustion motor (ICE) vehicles.

Aside from that, Antlitz said one-offs specified arsenic the interaction of U.S. tariffs and restructuring measures had a combined outgo of astir 2 cardinal euros.

Key net highlights:

• Volkswagen reported 80.8 cardinal conveyance income successful the 3 months done June, down 3% from the aforesaid play a twelvemonth ago.
• Order intake for vehicles successful Western Europe roseate by 19% successful the archetypal fractional of the year.
• The institution said it expects a full-year concern ratio of betwixt 12% to 13% successful its automotive division.

Trump precocious threatened to rise duties connected EU car imports to 30% from Aug. 1, ramping up the pressure on the 27-nation trading bloc. The European Commission, the EU's enforcement arm, has since been considering its response.

Volkswagen said it is assumed that U.S. import tariffs of 27.5% volition proceed to use successful the 2nd fractional of the year, noting determination is "high uncertainty" with respect to commercialized policy.

Shares of Volkswagen roseate 2.7% connected Friday morning, reversing earlier losses.

Rico Luman, elder assemblage economist for transport and logistics astatine Dutch slope ING, said it was encouraging to spot that Volkswagen had been capable to ramp up its electrical car income "quite significantly," peculiarly successful its location marketplace of Europe.

"Yes, they struggled to support up successful the export market, but astatine slightest [the] location marketplace is doing good astatine the moment. They are ramping up EV sales. It's present hitting 11% connected a planetary level of its full income — and successful Europe it is already overmuch more," Luman told CNBC's "Europe Early Edition" connected Friday.

"They perchance mightiness person benefitted from deteriorated Tesla sales but inactive it is doing rather good astatine the infinitesimal successful Europe," helium added.

Volkswagen reported first-half conveyance income maturation of 19% successful South America, 2% successful Western Europe and 5% successful Central and Eastern Europe. The institution said this much than made up for the expected declines of 3% successful China and — chiefly owed to tariffs — for a 16% dip successful North America.

The institution said its bid intake for all-electric vehicles successful the archetypal fractional of 2025 roseate by 62%.

— CNBC's Jenni Reid contributed to this report.