Rounding up automakers' financial results

Several automakers reported monthly or quarterly results this morning. Let’s get to it:

Toyota: Sales are down, but profit’s up

TOKYO — Toyota Motor posted a 17% increase in first-quarter profit on Thursday, as cost-cutting and a weaker yen helped offset lower sales and a decline in production at home. 

The world’s top-selling automaker said operating profit for the three months through June totaled 1.3 trillion yen ($8.70 billion), matching the average of six analyst estimates compiled by LSEG. But with that growth being the weakest in seven quarters, the results disappointed investors who had been betting the automaker would knock the lights out. Tokyo-listed shares in Toyota, which declined more than 5% before earnings were released, extended losses and fell almost 9% on Thursday.

Toyota has been on a record profit run that has boosted its share price. But its outlook has been complicated by a tough market in China and the fall-out from a certification scandal. 

Retail sales of Toyota and luxury Lexus brand cars declined 2% in the quarter, with the share of petrol-electric hybrids in sales reaching about two fifths. Toyota, a pioneer in hybrid technology, has benefited as demand for EVs has slowed in markets such as the United States. 

The automaker maintained its forecast of 4.3 trillion yen profit for the full year, versus a 5.3 trillion yen average of 18 analyst estimates. 

VW: Mixed results

Volkswagen Group reported mixed results and a downbeat forecast, reflecting some of the deeper challenges facing large multinational automakers as they come grips with cost-cutting, and an evolving marketplace where EV uptake has been choppy.

Volkswagen — which counts brands like its Audi, Porsche, Bentley and others in its portfolio — reported second quarter revenue of €83.339 billion ($90.0 billion) vs. €81.697 estimated, a rise of 4.1% compared to a year ago. Operating profit came in at €5.464 billion ($5.90 billion) vs. €5.486 billion, a slight miss compared to estimates but a drop of 2.4% compared to the same period a year ago.

Operating returns, or operating margins, fell to 6.6% in the quarter from 7% a year ago, though higher than the overall first half margin of 6.3%. Volkswagen said its operating results were impacted by unplanned items like severance payments at VW, with margins hit by higher fixed costs, the closing of a gas turbine business, and the winding down of VW Bank in Russia.

“A margin of 6.3% after six months is below our ambitions and potential, given our array of great vehicles, our brand portfolio, and our global footprint,” Volkswagen Group CFO & COO Arno Antlitz said in a statement. “However, we must make significant efforts on the cost side in the second half and beyond in order to achieve our targets.”

Across its sales territories, VW saw overall growth in North America and South America, which nearly offset losses it said in regions like China, the company said. Q2 global vehicle deliveries fell 3.8% to 2.244 million, with a rise in revenue due to financing activities, and reflecting better product mix.

The German automaker has also recently taken advantage of partnerships to lower costs. In the U.S., Volkswagen announced it will work with Rivian to create next-gen software-defined vehicles (SDV) to be used in both companies’ future EVs, with Volkswagen infusing up to $5 billion through 2026. 

Most recently, Volkswagen backtracked and said its ID.7 EV sedan would not come to the U.S.

Ferrari: ‘Sitting at the pinnacles’

MILAN — Pricier models such as the Daytona SP3 and growing demand from buyers for personal touches helped Ferrari beat second-quarter results forecasts on Thursday and raise its full-year expectations.

The Italian company said it now saw adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rising to at least 2.50 billion euros ($2.70 billion) this year, versus a previous forecast of at least 2.45 billion euros.

“Our net revenues and profitability were up double digit, sustained by the enrichment of the product mix and the increased demand for personalizations, which led us to upgrade our 2024 guidance,” CEO Benedetto Vigna said in a statement.

In contrast, Porsche last month cut its sales and profit guidance due to an unexpected aluminum alloy supply shortage, hammering its shares.

“Ferrari handsomely beat today pretty much across the board,” Bernstein analysts said in a note. “It reinforces our contention that there is only one Ferrari …. sitting at the pinnacles.”

Ferrari’s second-quarter adjusted EBITDA increased 14% to 669 million euros, just ahead of analysts’ average forecast of 650 million in a Reuters poll.

The company known for its prancing horse logo also generated 121 million euros of cash in the quarter.

It said pricing power contributed 122 million euros to quarterly earnings, supported by demand for the 2-million euro, 12-cylinder Daytona SP3, as well as a “few sales” of the limited series, track-only 499P Modificata, which costs 5.1 million euros.

Demand from customers for personalizations — both inside and outside the car — boosted the results too, along with a strong performance in the Americas. In 2023, personalizations accounted for around 19% of Ferrari’s 6 billion euros of revenue, mainly relating to paint, liveries and use of carbon.

BMW: Hurt by China, helped by EVs

BERLIN — BMW reported a lower-than-expected profit margin in its core automotive segment during the second quarter on Thursday, hitting its shares as heightened competition and weaker demand in China weighs on the sector.

The German automaker’s earnings before interest and tax (EBIT) margin in its car segment fell to 8.4% from 9.2% in the same period last year, falling short of the 8.7% expected by analysts, according to a company-compiled consensus.

BMW and its peers are under pressure in their key market China, where local carmakers are gaining share with lower-cost electric vehicles, forcing their European rivals to slash prices. The Munich-based carmaker saw a 4% slump in its China sales in the first six months of the year but performed better in the region than Volkswagen and Mercedes.

BMW, whose heavy investment in model revamps also weighed on second-quarter results, is seeing strong demand for its all-electric models, setting the company apart from its rivals.

“In our view, e-mobility will continue to be the core drive technology of the future and our primary growth driver,” CEO Oliver Zipse said in a speech to investors, adding that BMW was the world’s third-largest e-car manufacturer.

BMW and its smaller brands Mini and Rolls-Royce increased sales of purely electric cars by a quarter to just over 190,000 in the first half of 2024.

Carvana beats forecasts though used car prices are falling

Shares of Carvana surged nearly 15% a day after the used car retailer forecast annual core profit above Wall Street estimates, as more car buyers consider shopping online.

Baird analyst Craig Kennison said the company’s story promised a bright future and Carvana was “well positioned” to gain share as automotive shopping moves online.

Carvana has employed a series of measures over the years including slowing down on car purchases for its inventory, pausing some hiring and halting share buybacks, as it navigated through bumpy vehicle demand.

The company best known for its vehicle vending machines on Wednesday said it forecast 2024 adjusted EBITDA between $1 billion and $1.2 billion, above analysts’ estimates, according to LSEG data.

Pre-owned car demand has been improving over the past few months, but retailers have had a difficult time with making enough due to an overall decline in used vehicle prices.

The average used-vehicle listing price was $25,251, down 7.6% from a year earlier, according to data from Cox Automotive.

Carvana is set to add roughly $4 billion in market value if the gains hold. The shares of the once troubled car retailer has more than doubled so far this year.

Includes material from Yahoo Finance.