Investing.com -- Shares of Volkswagen (ETR:VOWG) rose following the German automobile manufacturer's results.
At 4:53 am (0853 GMT), Volkswagen was trading 2.4% up at €94.60.
Volkswagen’s Q3 results beat initial expectations, with the company reporting an EBIT of €2.86 billion, which was in line with consensus estimates.
Additionally, Volkswagen’s free cash flow for the quarter reached €3.4 billion, double the consensus estimate of €1.7 billion, driven largely by positive working capital inflows.
Audi, Volkswagen’s premium brand, emerged as a key strength in the quarter, with an underlying EBIT margin just above 8%, a level that likely positions Audi as one of the most profitable premium automotive brands for Q3.
The VW brand reported an EBIT margin of 1.8%, and the group’s Core brands posted a 3.2% margin. Volkswagen’s performance in China also slightly exceeded expectations, contributing €378 million to earnings, above the consensus forecast of €360 million.
Stifel analysts said that Volkswagen’s pricing held steady in Q3, with positive volume effects partly driven by increased sales of components. The company reiterated its end-of-September full-year guidance, projecting revenue of €320 billion, EBIT of €18 billion, and free cash flow of €2 billion.
While Volkswagen’s underlying performance indicates resilience, analysts cautioned that the company faces potential challenges in transitioning from internal combustion engines (ICE (NYSE:ICE)) to battery electric vehicles.
Stifel analysts noted that VW’s advantage in ICE technology, particularly through scale economies on its MQB platform, does not easily translate to BEVs. Other risks include potential demand weakening, increased financing costs, and tariffs in major markets like the United States and China.