HSBC has confirmed its "buy" rating on Volkswagen shares with an unchanged target price of €113.
HSBC estimates that the group's operating return on sales (RoS) in Q2 is within the range expected for FY 2025 (5.5% to 6.5%), excluding exceptional items such as customs duties and a significant restructuring charge of around three million for Audi.
However, the broker highlights the lack of specific guidance on the impact of tariffs or planned mitigation measures, noting that further details will be provided when Q2 results are released and during the earnings conference call.
The broker says that cash generation was impacted by several non-recurring items, including restructuring-related cash outflows (approximately €500m), the disbursement of a €1bn investment in Rivian, and dividend payments. As a result, over the quarter free cash flow is expected to be negative.
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Volkswagen AG is a Germany-based company, which manufactures and sells vehicles. The Group consists of two divisions: the Automotive Division and the Financial Services Division. The Automotive Division comprises the Passenger Cars, Commercial Vehicles and Power Engineering business areas. This division focuses on the development of vehicles, engines and vehicle software, the production and sale of passenger cars, light commercial vehicles, trucks, buses, and motorcycles, as well as businesses for genuine parts, large-bore diesel engines, turbomachinery, and propulsion components. The Financial Services Division focuses on dealer and customer financing, leasing, direct banking, and insurance activities, fleet management and mobility services. Its brand portfolio includes Volkswagen, Audi, SEAT, SKODA, Bentley, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania, and MAN.
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