The logo of German carmaker Volkswagen is seen on a rim cap in a showroom of a Volkswagen car dealer in Brussels, Belgium July 9, 2020.
The logo of German carmaker Volkswagen is seen on a rim cap in a showroom of a Volkswagen car dealer in Brussels, Belgium July 9, 2020. Reuters / Francois Lenoir

Volkswagen confirmed its full-year outlook on Thursday as supply chain bottlenecks in items from wire harnesses to chips eased, but warned the war in Ukraine and threats to European energy supply loomed over the second half.

A steep drop in operating profit to 4.7 billion euros ($4.81 billion) before special items still beat expectations of seven analysts polled by Refinitiv of 4.6 billion euros.

Volkswagen reported an unusually high operating profit of 8.5 billion euros in the first quarter, but said this was largely due to positive effects of commodity hedges and was not cash-effective.

By contrast, the carmaker said the second-quarter result included around 2.4 billion euros in losses from derivatives, mainly due to raw material hedging. "Before these book-value losses, the underlying performance even improved over a good Q1 2022," it added.

As production problems hampered output in volume segments, premium brands bolstered the carmaker's finances in the first half, with Audi registering a 51% jump in operating profit and Porsche up 22% in contrast to an 8% dip at the Volkswagen brand.

Still, monthly production volumes across the group improved significantly towards the end of the second quarter, it said, particularly as coronavirus restrictions lifted in China.

"The group expects the product mix to normalise in the second half of the year as the semiconductor situation improves and the company benefits from a strong order backlog," Chief Financial Officer Arno Antlitz said.

Antlitz will take on the role of chief operating officer at Volkswagen from Sept. 1 alongside his position as CFO, when a reshuffle at the helm announced last Friday takes effect. That also ousted chief executive Herbert Diess in favour of Oliver Blume, CEO of luxury brand Porsche.

Volkswagen said in April the war in Ukraine could call its full-year outlook into question but has stuck with it since then, expecting sales to rise 8%-13%, an operating profit margin of 7.0%-8.5%, and an increase in deliveries of 5-10%.

Sales fell by around a fifth in the first half of the year, with Europe hardest hit. "Particularly in Europe, uncertainty exists around energy supply," the carmaker said.

($1 = 0.9781 euros)