Investing.com - Volkswagen (ETR:VOWG_p) stock fell Wednesday after the German auto giant issued a profit warning, stating that it may also close a plant of its luxury brand Audi.
At 06:05 ET (10:05 GMT), VW stock fell 0.7% to €111.67, down 6% year-to-date.
The company lowered its 2024 operating return on sales forecast to 6.5%-7% from 7%-7.5% and said the Audi brand was considering closing its Brussels site, which employs about 3,000 people, due to low demand for its higher-end electric cars.
Volkswagen said the costs of finding an alternative use for the Brussels plant or closing it, as well as other unplanned expenses, would have an impact totalling up to E2.6 billion (E1 = $1.0819) in the 2024 financial year.
“We see the announcement as part of the cost efficiency and re-sizing program taking place at VW and a possible indicator of upcoming restructuring actions across the European automotive industry in coming years,” said analysts at Jefferies, in a note.
Jefferies has a ‘buy’ rating on Volkswagen, with a €150 price target.
The output of the Brussels plant has declined from some 120,000 units in 2012 to fewer than 40,000 units in 2024, said analysts at Stifel, in a note.
With this in mind, “we rate the decision to reduce capacity at Audi [as] positive.”
Stifel also has a ‘buy’ rating on the German car manufacturer, with a €149 price target.
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