VW Group hit by $940 million H1 loss

FRANKFURT -- Volkswagen reported a first-half operating loss on Thursday after suffering a 27 percent drop in vehicle deliveries due to the coronavirus pandemic, which forced the automaker to slash its dividend.

The automaker posted an adjusted operating loss of 800 million euros ($940 million) in the January to June period, down from a 10 billion euro adjusted operating profit in the year-earlier period, and said it will cut its dividend for 2019.

“The first half of 2020 was one of the most challenging in the history of our company due to the COVID-19 pandemic,” VW Group Chief Financial Officer Frank Witter said in a release.

The company proposed a dividend of 4.80 euros per ordinary share and 4.86 euros per preferred share, down from a previous proposal for 6.50 euros per ordinary share and 6.56 euros per preferred share.

VW predicted a significant decline in full-year sales from 2019 levels, even though it said global sales had staged a gradual recovery as lockdowns eased.

The multi-brand car and truck maker said it expects its 2020 operating result before and including special items to be severely lower than in 2019, albeit in positive territory.

Restoring operations to pre-crisis levels is critical for VW Group after it rolled out a fresh iteration of the important Golf hatchback and plans to start delivering the full-electric ID3 to customers in September.

The success of the ID3 is vital to comply with stricter emissions rules in Europe and catch up with Tesla, which in recent weeks zoomed past traditional manufacturers to become the world’s most valuable automaker.

Separately, French rival PSA Group on Wednesday delivered a second-quarter profit and reiterated its goal of achieving margins of over 4.5 percent in its automotive unit this year, even though these were down to 3.7 percent in the first half.