Volkswagen Lowers 2019 Sales Outlook As Demand Cools

Volkswagen lowered its full-year sales outlook on Wednesday, warning of slowing demand even as nine-month adjusted operating profit jumped 11.2% on increased demand for SUVs as well as Skoda and Porsche cars. The German carmaker said a slowdown in global demand would result in 2019 vehicle deliveries being in line with last year's figures, adjusting its previous forecast for a slight rise.

"Despite the gain in market share, the Volkswagen Group anticipates that vehicle markets will contract faster than previously anticipated in many regions of the world," it said. Increased demand for higher-margin VW Tiguan and Touareg models helped to offset an overall drop in sales of the VW brand in the nine months ending September, with Porsche and Skoda deliveries up 8% and 15.3% respectively.

Revenue for its passenger cars division is still expected to rise 5% this year and the company reiterated that it expects an operating profit margin for the passenger cars division and the group to be in the range of 6.5% to 7.5% for the full year. The updated guidance follows Ford's cut this week to its operating profit forecast, blaming a slowdown in demand in China and other headwinds.

Volkswagen said special items from legal risks, caused by the 2015 diesel emissions cheating scandal, had fallen to 1.3 billion euros ($1.45 billion) from 2.4 billion euros in the same period last year. Third-quarter adjusted operating profit jumped 37% to 4.82 billion euros, with analysts at Evercore ISI estimating Porsche's profit margin at 16.8%, well ahead of Audi with 7.5% and the VW brand at 4.1%.

"The divisions beat expectations which will help the perception of quality of earnings," Evercore's Arndt Ellinghorst said in a note.