Volkswagen Shares Fall After Profit Warning and Euro Stoxx 50 Exit

Volkswagen shares dipped on Monday after another profit warning issued by the embattled German carmaker was followed by its departure from Europe's blue-chip index.

Shares were 0.5% lower in mid-morning deals, extending Friday's 8.3% decline after Volkswagen downgraded its expected operating return on sales to 1%, from a previous forecast of 4% to 5.5%. It blamed an impairment related to its large holding in Porsche , a "further deterioration" in the market environment — particularly in China — and restructuring expenses.

"An accelerated shift in demand in favor of battery-electric vehicles ... will lead to developments falling short of original expectations, especially for the Audi and Volkswagen Passenger Cars brands," the company added.

Separately, Volkswagen was ejected from the Euro Stoxx 50 on Monday, a move announced earlier this month as part of the index's annual update to reflect the euro area's biggest companies across major sectors.

Volkswagen's share price has fallen 27.5% this year and is currently near its lowest level since 2010.

That is despite the approval earlier this month of the next stage of a major restructure and streamlining effort that will cut 100,000 jobs as Volkswagen grapples with waning profits, Chinese competitors, tariff complications and the electric vehicle transition.

Deutsche Bank analysts said Monday that while the latest profit warning "initially looks severe," it "significantly overstates the deterioration in the underlying business."

The update includes 10 billion euros in one-off effects that will hit earnings this year, but underlying margins remain at around 4% and cash generation remains intact, Deutsche added in a note.

But Volkswagen's Euro Stoxx 50 exit reflects the struggles facing Europe's autos sector, which has been battered in recent years by higher costs, intensifying global competition and a struggle to meet fast-changing consumer demand for EVs and hybrids.

Jeep and Dodge-maker Stellantis fell out of the blue-chip index a year ago amid its own challenges and restructuring.

Volkswagen was replaced in the Euro Stoxx 50 by Finland's Nokia, which is seeing a huge boost from AI-related growth thanks to its key role in data center connectivity.