Ukraine war throws VW outlook into question, CEO warns

 Ukraine war throws VW outlook into question, CEO warns

by Er kamalanathan j

BERLIN, March 15 (Reuters) - A lack of wiring harnesses from Ukraine has overtaken a scarcity of semiconductors as Volkswagen's (VOWG_p.DE) largest deliver chain headache as the Russia-Ukraine struggle clouds its prospects for this 12 months, the world's No.2 carmaker warned on Tuesday.

Rising raw fabric costs will drive up fees for each electric powered and inner combustion engine automobiles, Chief Financial Officer Arno Antlitz said, with the whole lot from batteries to catalytic converters set to end up extra costly.

In mild of growing instability in Europe, boosting income in China - wherein Volkswagen presently has 16% market proportion and goals to double battery-electric powered automobile sales this yr - is a good higher priority than earlier than, CEO Herbert Diess added.

"The struggle inside the Ukraine has placed our present outlook into question," Diess said at the German organization's annual press convention following Friday's 2021 effects, caution commodity markets are probable to stay unstable until 2026.

Rival Tesla (TSLA.O) on Tuesday raised charges in China and the USA for the second one time in days after its CEO stated surging uncooked substances and logistics prices. Examine greater

Diess said Volkswagen had end up more resilient via the coronavirus pandemic and underneath everyday instances would have cause for optimism for 2022.

The organization reduce overhead costs beforehand of schedule ultimate year, leading to 4 billion euros ($four.Four billion) of advantages in comparison with 2019, said Antlitz.

The capability preliminary public offering (IPO) of sports automobile emblem Porsche will offer additional flexibility, he said, including an IPO ought to nevertheless happen as soon as the fourth sector of 2022, notwithstanding contemporary marketplace uncertainties.

However, a halt in substances of wire harnesses, which package deal up to 5 km (three.1 miles) of cables in a vehicle and are specific to every model, could force Volkswagen to revise its outlook if opportunity resources aren't discovered in three-four weeks, Diess said.

The carmaker is relocating production from Ukraine to North Africa and Eastern Europe - a procedure which isn't complicated but time-ingesting, the CEO stated.

Volkswagen offered two million fewer cars than planned remaining yr because of semiconductor shortages and said that, whilst the situation have to improve this yr, there ought to nevertheless be a drag on increase.

The carmaker said on Friday its working profit doubled in 2021 to just underneath 20 billion euros thanks to higher expenses and a favourable product mix, despite overall unit deliveries hitting a ten-yr low of 8.9 million.

Looking forward, it expects to growth deliveries by means of five-10% in 2022 and increase revenues with the aid of eight-13%, it stated on Friday.

Both Volkswagen and Japan's Toyota (7203.T) suspended manufacturing quickly at a few plant life in China amid COVID-related lockdowns, with Toyota caution on Tuesday the suspensions could last numerous extra weeks.

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