Volkswagen Group said on Thursday its preliminary first-quarter operating return on sales jumped to 13.5 percent from 7.7 percent in the same period of 2021, but the impact of the war in Ukraine and supply chain bottlenecks was still uncertain.
"The effects of the further course of the Ukraine war still cannot be predicted with sufficient certainty," the company said in a statement. "There is therefore still a risk that further developments in the Ukraine war will have a negative impact on the Volkswagen Group's business activities. This may also result from bottlenecks in the supply chain."
Despite the challenges, VW Group said its operating profit before special items will reach 8.5 billion euros ($9.3 billion) during the first three months of the year.
A large part of the boost stems from the non-cash revaluation of commodity hedges on VW’s books after the price of raw materials like nickel surged.
The shares fell to 1.3 percent to 10:54 a.m. in Frankfurt trading, taking the decline since the start of the year to 16 percent.
VW as well as other major consumers of commodities use hedging instruments to shield against often volatile prices moves on raw materials they depend on.
Russia's invasion of Ukraine is exacerbating already tight supply of a range of inputs such as nickel and aluminum as the global economy recovers following the pandemic. Sanctions against Russia, a major source of commodities, is further squeezing supplies.