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VW delays earnings amid uncertainty on scandal cost

Christoph Rauwald, Karin Matussek and Naomi Kresge
Bloomberg News

Volkswagen AG took the unusual step of delaying the publication of its annual results and pushed back its shareholders’ meeting, showing the extent of the financial turmoil caused by the emissions scandal that has dogged the company since September.

The company didn’t say when it will publish earnings for 2015, which was originally scheduled for March 10. The company reiterated Friday that it expects an operating result on the level of the previous year, within the range of its earlier forecasts.

The delay is a further admission that Volkswagen doesn’t yet know the full financial fallout from the scandal. The company has already revised its earnings targets and set aside 6.7 billion euros ($7.5 billion) to cover the cost of repairs for about 11 million vehicles around the world.

Still uncertain is how to meet tough pollution regulations in the U.S., where authorities rejected the carmaker’s first proposal.

“It’s an unusual step, but considering the complexity of this issue, it’s probably understandable,” said Juergen Pieper, a Frankfurt-based analyst with Metzler Bank. “Maybe they need more time for the auditors to finalize work or realized they need to prepare for higher provisions.”

Chief Executive Officer Matthias Mueller has cautioned the sum set aside last year won’t cover the full extent of damages, including fines and measures to win back disgruntled customers.

Volkswagen’s credit rating has already taken a hit, with all major ratings agencies downgrading the carmaker last year. The company is working on clarifying all open questions for the release of last year’s financial statement, a spokesman said on Friday.

PricewaterhouseCoopers LLP, Volkswagen’s auditors, said in October it couldn’t determine whether the company’s third-quarter provisions for the scandal were sufficient. If Volkswagen can’t get its auditors to sign off on the full-year report without caveats, it would raise concern among ratings agencies, large investors and lenders.

The carmaker has struggled to come to an agreement with U.S. regulators. The California Air Resources Board rejected the first proposal for fixing VW’s cars last month, and it’s not clear how soon a conclusion could be reached. Volkswagen submitted a plan for its larger 3-liter diesel engines this week, and U.S. authorities have yet to respond.

Porsche Automobil Holding SE, the family holding company that controls Volkswagen, also postponed its results and general meeting, saying the scandal may affect last year’s results. It had originally forecast profit after tax between 800 million euros and 1.8 billion euros.

Volkswagen said it still plans to publish the results of an investigation into the origins of the scandal in the second half of April. The company has lost about 20 billion euros in market capitalization since the scandal became public.

“Volkswagen will achieve the best possible transparent and reliable outcome for its shareholders and stakeholders,” the company said in its statement announcing the delays. The annual meeting had originally been planned for April 21.