Volkswagen says tariffs will dampen business as profit plunges / Photo: © AFP/File
Volkswagen says tariffs will dampen business as profit plunges
Europe's largest carmaker Volkswagen said Wednesday that first quarter profit plunged due to higher costs as it warned of muted business for the rest of the year in the wake of trade tensions.
Net profit fell 40.6 percent in the first three months of the year to hit 2.19 billion euros ($2.49 billion) even as revenue rose three percent to reach 77.56 billion euros.
The 10-brand group, which apart from its namesake includes Audi, Skoda and Porsche, had warned earlier in April that one-off costs of 1.1 billion euros would weigh on its result.
These included restructuring costs at its troubled software unit as well as EU fines for selling too many polluting vehicles, Volkswagen said.
For the rest of the year, the carmaker said that it expected business "towards the lower end" of its guidance, citing challenges including increased competition, more stringent emissions regulations and trade tensions.
US President Donald Trump has threatened and imposed a variety of tariffs designed to bring manufacturing back to his home country, including a levy of 25 percent on car imports.
North America took just over 11 percent of Volkswagen vehicle deliveries in the first quarter, making it the firm's third most region after western Europe and China.
Volkswagen expects a profit margin of between 5.5 and 6.5 percent for the coming year.
S.M.Riley--TNT
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