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Volkswagen posts €3.48bn operating loss as emissions scandal bites - business live Volkswagen posts €3.48bn operating loss as emissions scandal bites - business live
(35 minutes later)
9.57am GMT09:57
UK drivers demand answers from VW
I’ve just received a statement from UK legal firm Leigh Day, who are representing 6,500 Volkswagen owners seeking compensation from the company.
Bozena Michalowska Howells, lawyer at Leigh Day, says Volkswagen CEO Matthias Müller needs to give drivers more information about how the problem will be solved.
She says:
“We are nearly 6 weeks into this scandal and Volkswagen customers still do not know what is going to happen to their vehicles.
“If Mr Mueller wishes to restore trust he could start by answering the specific questions we have asked him on behalf of UK drivers and start the process of setting up a compensation scheme.
In our letter sent earlier this month we asked whether affected cars have valid EU type approval and what will Volkswagen be doing to compensate both owners of recently purchased vehicles, and secondhand vehicles.
We have yet to receive a response. It must be surely within his power to answer these simple questions.”
9.40am GMT09:40
Sales at VW are already down compared with last year, even before customers have reacted to the news that it cheated emissions tests.
The company sold 7.43 million vehicles between January and September, a 1.5% decline on 2014.
We can’t blame that on the diesel scandal, though - as it only broke in mid-September. Instead, VW appears to be suffering from the weakening emerging markets.
Sales actually rose in Western Europe and the US, but suffered a “drastic decline” in South America and Eastern Europe.
Updated at 9.42am GMT
9.30am GMT09:30
VW: We may face considerable financial costs
VW has warned shareholders that it faces legal risks from the diesel emissions scandal that cannot be assessed at present”.
In today’s financial results, it cautions that:
The ongoing investigations mean that assessment of the circumstances is subject to estimation risk. In particular, considerable financial charges may be incurred as the legal risks crystallize.
The €6.7bn charge set aside to cover the cost of recalling and fixing engines with cheat software is probably not be the end of the matter.....
9.16am GMT09:169.16am GMT09:16
Volkswagen has jumped to the top of the leaderboard on the Frankfurt stock exchange.Volkswagen has jumped to the top of the leaderboard on the Frankfurt stock exchange.
After initially plunging, shares rallied by 3% in volatile trading.After initially plunging, shares rallied by 3% in volatile trading.
Investors may be reassured that things aren’t even worse, even though VW posted a bigger loss that expected and warned that sales will be flat this year.Investors may be reassured that things aren’t even worse, even though VW posted a bigger loss that expected and warned that sales will be flat this year.
However, at €108 each, shares are still around 30% below their pre-crisis levels.However, at €108 each, shares are still around 30% below their pre-crisis levels.
#VW shares pop thanks to earnings (pic1) but the context in pic 2 shows patience required if looking for value. pic.twitter.com/68v2DMean7#VW shares pop thanks to earnings (pic1) but the context in pic 2 shows patience required if looking for value. pic.twitter.com/68v2DMean7
8.45am GMT08:458.45am GMT08:45
Porsche has warned that its profits will be lower than expected this year due to the emissions scandal.Porsche has warned that its profits will be lower than expected this year due to the emissions scandal.
. @Porsche also cuts FY profit forecast. @Porsche also cuts FY profit forecast
Porsche was acquired by Volkswagen in 2012, but still owns a 51% stake in VW (it’s complicated...) so is clearly exposed to the crisis in Wolfsburg.Porsche was acquired by Volkswagen in 2012, but still owns a 51% stake in VW (it’s complicated...) so is clearly exposed to the crisis in Wolfsburg.
Reuters has the details:Reuters has the details:
Porsche SE said on Wednesday it now expects to post a 2015 profit after tax of €0.8 to €1.8bn, mainly due to the third quarter earnings slump of Volkswagen.Porsche SE said on Wednesday it now expects to post a 2015 profit after tax of €0.8 to €1.8bn, mainly due to the third quarter earnings slump of Volkswagen.
“Porsche SE’s forecast is subject in particular to further findings in connection with the Diesel emissions issue,” the group said in a statement.“Porsche SE’s forecast is subject in particular to further findings in connection with the Diesel emissions issue,” the group said in a statement.
Updated at 8.56am GMTUpdated at 8.56am GMT
8.32am GMT08:328.32am GMT08:32
Here’s Volkswagen’s new chief, Matthias Müller, this morning’s €3.48bn loss:Here’s Volkswagen’s new chief, Matthias Müller, this morning’s €3.48bn loss:
“The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear. We will do everything in our power to win back the trust we have lost.”“The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear. We will do everything in our power to win back the trust we have lost.”
8.30am GMT08:308.30am GMT08:30
VW: Sales will be flat in 'challenging market'VW: Sales will be flat in 'challenging market'
More gloom -- VW has warned that it won’t achieve any sales growth this year.More gloom -- VW has warned that it won’t achieve any sales growth this year.
It says:It says:
The Volkswagen Group expects deliveries to customers in 2015 to remain on a level with the previous year in a persistently challenging market environment.The Volkswagen Group expects deliveries to customers in 2015 to remain on a level with the previous year in a persistently challenging market environment.
And it is also warning shareholders that operating profits will tumble this year:And it is also warning shareholders that operating profits will tumble this year:
Because of charges related to the irregularities in the software used for certain diesel engines, we expect 2015 operating profit for both the Group and the Passenger Cars Business Area to be down significantly year-on-year.Because of charges related to the irregularities in the software used for certain diesel engines, we expect 2015 operating profit for both the Group and the Passenger Cars Business Area to be down significantly year-on-year.
8.27am GMT08:278.27am GMT08:27
Even if you ignore the huge cost of the emissions scandal, VW’s profits are lower than a year ago.Even if you ignore the huge cost of the emissions scandal, VW’s profits are lower than a year ago.
Operating profits after special items came in at €3.206bn, lower than the €3.23bn in Q3 2014.Operating profits after special items came in at €3.206bn, lower than the €3.23bn in Q3 2014.
8.24am GMT08:248.24am GMT08:24
Volkswagen has set aside another €200m to cover the cost of the emissions scandal.Volkswagen has set aside another €200m to cover the cost of the emissions scandal.
Today’s results include ‘negative special items relating to diesel issue of €6.7bn”. It had previously announced a charge of €6.5bn.Today’s results include ‘negative special items relating to diesel issue of €6.7bn”. It had previously announced a charge of €6.5bn.
8.16am GMT08:168.16am GMT08:16
This is the first time in at least 15 years that VW has reported a quarterly loss, according to Reuters.This is the first time in at least 15 years that VW has reported a quarterly loss, according to Reuters.
Updated at 8.19am GMTUpdated at 8.19am GMT
8.09am GMT08:098.09am GMT08:09
Volkswagen reports €3.48bn loss VOLKSWAGEN REPORTS €3.48bn LOSS
Breaking! Volkswagen has suffered a €3.48bn operating loss in the third quarter of 2015, due to the cost of the diesel emission scandal. Breaking! Volkswagen has suffered a €3.48bn operating loss in the third quarter of 2015.
As feared, the carmaker has been dragged into the red by the cost of the diesel emission scandal.
That’s even worse than the €3.26bn operational loss which analysts had expected (see opening post).That’s even worse than the €3.26bn operational loss which analysts had expected (see opening post).
The pain shows...@Volkswagen 3Q operating loss bigger than expected = Eu3.48bThe pain shows...@Volkswagen 3Q operating loss bigger than expected = Eu3.48b
That compares with a €3.23bn profit a year ago.That compares with a €3.23bn profit a year ago.
This is due to the cost of recalling and fixing 11 million vehicles worldwide. This is mainly cause by the charge for recalling and fixing 11 million vehicles worldwide.
And there’s more bad news -- VW has cut its profit forecast for for the full year to include the impact of the crisis.And there’s more bad news -- VW has cut its profit forecast for for the full year to include the impact of the crisis.
It admits that earnings before interest and tax would drop “significantly.”It admits that earnings before interest and tax would drop “significantly.”
More details to follow....More details to follow....
Updated at 8.24am GMT Updated at 10.00am GMT
7.54am GMT07:547.54am GMT07:54
VW apologises (again) for emissions scandalVW apologises (again) for emissions scandal
Over in Tokyo, two top Volkswagen executives have said sorry for the emissions cheating scandal at the Tokyo Motor Show.Over in Tokyo, two top Volkswagen executives have said sorry for the emissions cheating scandal at the Tokyo Motor Show.
Associated Press has the details:Associated Press has the details:
Volkswagen’s new chief executive Herbert Diess apologized at the Tokyo auto show Wednesday for the automaker’s emissions-cheating scandal, promising to win back customer trust, and said it will delay the launch of a diesel vehicle in Japan.Volkswagen’s new chief executive Herbert Diess apologized at the Tokyo auto show Wednesday for the automaker’s emissions-cheating scandal, promising to win back customer trust, and said it will delay the launch of a diesel vehicle in Japan.
The head of VW’s Japan division Sven Stein, who appeared at the VW booth before Diess, bowed for several seconds in a Japanese style of apology. Diess made no bow.The head of VW’s Japan division Sven Stein, who appeared at the VW booth before Diess, bowed for several seconds in a Japanese style of apology. Diess made no bow.
“On behalf of my entire company, I’d like to apologize,” said Diess, a recent hire from BMW, stressing that the priority is to fix the problem, uncover what happened and make sure the scandal never happens again.“On behalf of my entire company, I’d like to apologize,” said Diess, a recent hire from BMW, stressing that the priority is to fix the problem, uncover what happened and make sure the scandal never happens again.
Diess added that VW will do everything possible to restore trust in the company.Diess added that VW will do everything possible to restore trust in the company.
And here’s Sven Stein’s apologetic bow:And here’s Sven Stein’s apologetic bow:
Updated at 7.59am GMTUpdated at 7.59am GMT
7.49am GMT07:497.49am GMT07:49
Will it never end? Lloyds Banking Group has set aside another £500m to cover the cost of mis-selling payment protection insurance to its customers.Will it never end? Lloyds Banking Group has set aside another £500m to cover the cost of mis-selling payment protection insurance to its customers.
That takes Lloyds’ total PPI bill to around £13.9bn (!).That takes Lloyds’ total PPI bill to around £13.9bn (!).
Updated at 7.49am GMTUpdated at 7.49am GMT
7.44am GMT07:447.44am GMT07:44
Volkswagen’s new CEO is also heading to China this week, as part of Angela Merkel’s trade delegation.Volkswagen’s new CEO is also heading to China this week, as part of Angela Merkel’s trade delegation.
Cars make up around a third of Germany’s exports to China, so Matthias Müller’s presence is an important signal to Beijing.Cars make up around a third of Germany’s exports to China, so Matthias Müller’s presence is an important signal to Beijing.
The visit comes at a crucial time for Germany, given concerns that the global economy is slowing down and hurting its manufacturing sector.The visit comes at a crucial time for Germany, given concerns that the global economy is slowing down and hurting its manufacturing sector.
Merkel is also expected to seek an update on the diesel scandal from Müller during the trip.Merkel is also expected to seek an update on the diesel scandal from Müller during the trip.
Related: VW chief to accompany Angela Merkel on trade visit to ChinaRelated: VW chief to accompany Angela Merkel on trade visit to China
7.39am GMT07:397.39am GMT07:39
Jes Staley says it’s “an honour” to become Barclays new CEO, and has pledged to improve its reputation:Jes Staley says it’s “an honour” to become Barclays new CEO, and has pledged to improve its reputation:
"We will be committed to preserving and enhancing the trust that is the foundation of Barclays’ reputation" says Staley"We will be committed to preserving and enhancing the trust that is the foundation of Barclays’ reputation" says Staley
He can also look forward to a fantastic pay package, if he gets the job right.He can also look forward to a fantastic pay package, if he gets the job right.
Staley's pay: £10.1m if all bonuses achieved, including a £2m buy-out from JP MorganStaley's pay: £10.1m if all bonuses achieved, including a £2m buy-out from JP Morgan
Updated at 7.41am GMTUpdated at 7.41am GMT
7.35am GMT07:357.35am GMT07:35
Barclays names Jes Staley as new CEOBarclays names Jes Staley as new CEO
Barclays has a new chief executive.Barclays has a new chief executive.
The bank has just announced the appointment of Jes Staley, an American investment banker with a long career on Wall Street, to fill the top job.The bank has just announced the appointment of Jes Staley, an American investment banker with a long career on Wall Street, to fill the top job.
Staley’s appointment isn’t a shock - he’d been rumoured to be the top candidate. By choosing him, Barclays appears to be rediscovering its love for investment banking:Staley’s appointment isn’t a shock - he’d been rumoured to be the top candidate. By choosing him, Barclays appears to be rediscovering its love for investment banking:
Our City editor Jill Treanor explains:Our City editor Jill Treanor explains:
The veteran investment banker spent more than 30 years at US bank JP Morgan before leaving in 2013 to join BlueMountain hedge fund.The veteran investment banker spent more than 30 years at US bank JP Morgan before leaving in 2013 to join BlueMountain hedge fund.
Staley replaces Antony Jenkins, who was ousted in July after three years attempting to restore Barclays’ fortunes after the Libor rigging crisis.Staley replaces Antony Jenkins, who was ousted in July after three years attempting to restore Barclays’ fortunes after the Libor rigging crisis.
Related: Barclays appoints Jes Staley as new chief executiveRelated: Barclays appoints Jes Staley as new chief executive
And here’s a profile of Staley, including some fascinating detail from his brother:And here’s a profile of Staley, including some fascinating detail from his brother:
Related: Jes Staley: who is the man tapped to be Barclays' next chief executive?Related: Jes Staley: who is the man tapped to be Barclays' next chief executive?
Updated at 7.37am GMTUpdated at 7.37am GMT
7.13am GMT07:137.13am GMT07:13
The Agenda: VW expected to post big loss todayThe Agenda: VW expected to post big loss today
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
How much financial trouble is Volkswagen in? We’ll get an insight this morning, when the troubled German carmaker releases financial results for the last quarter.How much financial trouble is Volkswagen in? We’ll get an insight this morning, when the troubled German carmaker releases financial results for the last quarter.
And it could be a historic moment, for all the wrong reasons. VW is expected to announce its first quarterly loss in 15 years, due to the diesel emissions scandal.And it could be a historic moment, for all the wrong reasons. VW is expected to announce its first quarterly loss in 15 years, due to the diesel emissions scandal.
According to 10 estimates compiled by Bloomberg, VW is expected to announce an operational loss of €3.26bn for the third quarter of 2015 -- a sharp reversal on the €3.23bn profit achieved a year ago.According to 10 estimates compiled by Bloomberg, VW is expected to announce an operational loss of €3.26bn for the third quarter of 2015 -- a sharp reversal on the €3.23bn profit achieved a year ago.
That’s due to the cost of cleaning up the scandal, with VW already committed to taking a €6.5bn charge to cover the cost of recalling 11 million vehicles which contain software to cheat emission tests.That’s due to the cost of cleaning up the scandal, with VW already committed to taking a €6.5bn charge to cover the cost of recalling 11 million vehicles which contain software to cheat emission tests.
And as the Wall Street Journal explains, VW faces a tough ride ahead:And as the Wall Street Journal explains, VW faces a tough ride ahead:
At a recent gathering of the company’s top echelon of executives at the Porsche plant in Leipzig, Germany, Volkswagen chief executive Matthias Müller said the company has to go through a rough patch before profit returns to precrisis levels.At a recent gathering of the company’s top echelon of executives at the Porsche plant in Leipzig, Germany, Volkswagen chief executive Matthias Müller said the company has to go through a rough patch before profit returns to precrisis levels.
“We have good prospects to shine again in two to three years,” he said.“We have good prospects to shine again in two to three years,” he said.
Investors will want more details, given the slump in VW’s share price since the scandal broke:Investors will want more details, given the slump in VW’s share price since the scandal broke:
Before his trip to China w/ Merkel, VW CEO faces investors as 1st loss in >15yrs looms. https://t.co/ghRh4VCzdd pic.twitter.com/CdSe74Hw2fBefore his trip to China w/ Merkel, VW CEO faces investors as 1st loss in >15yrs looms. https://t.co/ghRh4VCzdd pic.twitter.com/CdSe74Hw2f
Also coming up today....Also coming up today....
The City will watching financial results from Lloyds, as the UK banking season kicks off.The City will watching financial results from Lloyds, as the UK banking season kicks off.
We’ll have an eye on China, as German chancellor Angela Merkel heads to Beijing for a two-day trade mission.....We’ll have an eye on China, as German chancellor Angela Merkel heads to Beijing for a two-day trade mission.....
....and another eye on Brussels, as business secretary, Sajid Javid, travels to Brussels for high level talks with senior EU commissioners over the UK steel crisis.....and another eye on Brussels, as business secretary, Sajid Javid, travels to Brussels for high level talks with senior EU commissioners over the UK steel crisis.
And over in America, the Federal Reserve will conclude its two-day policy meeting (at 6pm GMT).And over in America, the Federal Reserve will conclude its two-day policy meeting (at 6pm GMT).
Investors don’t expect the Fed to raise interest rates today, given recent weak economic data. Also, there’s no press conference scheduled (although Janet Yellen could call an impromptu one if needed).Investors don’t expect the Fed to raise interest rates today, given recent weak economic data. Also, there’s no press conference scheduled (although Janet Yellen could call an impromptu one if needed).
We’ll be tracking all the main events through the day....We’ll be tracking all the main events through the day....
Updated at 8.04am GMTUpdated at 8.04am GMT