- Volkswagen shares dropped up to 7.5% after cutting 2026 profit outlook
- The 2026 operating return on sales forecast was cut to 1% from 4%-5.5%
- Challenging market conditions, especially in China, drove the revised forecast
Volkswagen AG shares tumbled as much as 7.5% on Friday after the German automaker sharply cut its 2026 operating return on sales outlook, citing a challenging market environment, particularly in China.
The stock hit an intraday low of €74.96, down 7.5% from the previous session's close. However, the shares pared some of the losses later in the session. Volkswagen Group Common Stock was trading at €76.52, down 5.58%, as of 5:39 p.m. GMT+2 on Sept. 18.
Volkswagen now expects its 2026 operating return on sales to be up to 1%, sharply lower than its earlier forecast of 4% to 5.5%, according to Investing.com.
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The company maintained its full-year sales revenue outlook at around €315 billion, roughly at the midpoint of its earlier guidance range.
Volkswagen said the revised forecast was driven by a deteriorating market environment, particularly in China, as well as an accelerated shift in demand towards battery-electric vehicles. Developments have fallen short of earlier expectations, especially at its Audi and Volkswagen Passenger Cars brands.
The automaker also expects around €10 billion in special effects to weigh on operating profit in 2026. Of this, about €900 million was already recognized in the first half of the year.
Excluding these special effects, Volkswagen expects its 2026 operating return on sales to be around 4%.
A major component is a non-cash impairment of around €6 billion on goodwill allocated to the Porsche business segment, which Volkswagen plans to recognize in the third quarter. The impairment follows updated medium- and long-term assumptions by Porsche regarding its enterprise value.
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Volkswagen also expects additional restructuring expenses linked to expanded early-retirement schemes and the planned sale of Volkswagen Osnabrück GmbH under the company's "Future of Volkswagen" agreement reached at the end of 2024.
Further non-cash impairments are expected on assets held by Volkswagen's fully consolidated Chinese operations. Together, these three effects are expected to have a negative impact of around €2 billion in the second half of 2026.
Despite the lower profit outlook, Volkswagen maintained its Automotive Division net cash-flow guidance at €3 billion to €6 billion and its 2026 net-liquidity outlook at €32 billion to €34 billion.
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