GO
Loading...

Volkswagen shares plunge on outlook, Scania deal

Shares in Volkswagen plunged on Monday after the group late on Friday toned down its 2014 operating profit outlook and announced plans to buy the rest of Swedish trucks division Scania in a deal partly financed by a capital increase.

After falling as much as 7.5 percent in early trade, shares in Europe's largest car maker were down 6.4 percent at 0848 GMT, dragging down the STOXX Europe 600 Automobiles & Parts Index, which was 1 percent lower.

(Read more Auto CEOs: 2014 will not be an easy year)

Adam Jeffery | CNBC

"Friday's release supported our concerns about muted earnings growth and the pace at which VW is adding capital (organic and M&A) and constraining returns," UBS analysts wrote in a note to clients, keeping a "sell" rating on the stock.

Volkswagen plans to buy out minority shareholders of Scania for 6.7 billion euros ($9.21 billion) as it aims to jump-start a stalled eight-year effort to forge Europe's biggest truckmaker.

It will sell preferred shares for up to 2 billion euros, issue hybrid capital of up to 3 billion euros and draw another 2 billion euros from its ample cash reserves.

(Read more: Volkswagen US CEO: Expect an 'array' of electric vehicles)

The company also said its 2014 operating margin could be within a range of 5.5 percent and 6.5 percent, compared with 5.9 percent last year.

Analysts at Barclays cut their recommendation on Volkswagen's stock to "equal weight" from "overweight", saying they expected the weak outlook and the Scania bid to dent sentiment and underline a view that VW management was "focused on being big at the expense of shareholder returns".

After 30 minutes of trading on Monday, the volume of Volkswagen shares was more than the stock's daily average volume of the past three months.

Follow us on Twitter: @CNBCWorld

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Europe Video

  • The FBI have stated that North Korea's government is responsible for the Sony attack. Neil Ashdown, deputy head of Asia analysis at IHS, weighs in, saying that it's difficult to "definitively attribute" a hacking attack to a particular group or state.

  • What were the main highlights of the EU Summit in Brussels? CNBC's Hadley Gamble gives you the lowdown.

  • Carnival Cruises earnings have beaten expectations in its fourth quarter, with lower fuel prices being a great help, says David Dingle, UK chairman of Carnival Cruises.