Stocks Fall as Supply-Chain Issues Hit Volkswagen's Cash Flow

VW vows to bounce back in 2023 after suffering from supply-chain snarls in 2022. Volkswagen VOW3 -1.05% is hoping things will improve in 2023 as a result of the snarls in supply chains.

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The company preannounced its 2022 results on Tuesday evening (ticker: VOW3.Germany). The full results will be released on March 14. On a full-year basis, the company reported an operating profit of 22.5 billion euros ($24.2 billion) on sales of 279 billion euros for the full year. Approximately 22.8 billion dollars were expected by Wall Street as well as 278 billion dollars.

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A total of 5 billion euros of free cash flow was generated by the automotive industry. Around 8.6 billion euros were the target that Volkswagen had set for itself.

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Bernstein analyst Daniel Roeska wrote Tuesday that supply chain and logistics problems in Q4 led to the miss. “It is anticipated that the company will see a large unwinding of the effect by 2023.”

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There appears to be a lot of trusts among investors in the company. Following the release of the early results, the stock has been stable. A drop of about 0.9% is reported in overseas trading for Volkswagen shares.

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It is expected that investors and analysts will want more detail about the company's cash flow when it meets with them in March. When it comes to changing from traditional, gasoline-powered cars to electric vehicles, cash flow is one of the most important metrics for the auto industry that needs to be considered.

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There have been commitments from the industry to invest hundreds of billions of dollars in EV development, assembly plants, and battery capacity for electric vehicles. In the coming few years, Volkswagen plans to invest roughly 16 billion euros a year in the development of electric and autonomous driving technologies, as well as the electrification of its cars.

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It is estimated that the German company spends close to 20 billion euros a year on plants and equipment. Over the first nine months of 2022, almost 14 billion euros have been invested in R&D by the company.

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In 2022, Volkswagen delivered 572,100 battery-electric cars to its customers, which represents an increase from 452,800 battery-electric vehicles delivered in 2021. Across the board, delivery numbers in 2022 came in at 8.3 million units, down from 8.9 million units in 2021.

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VW's American depositary receipts, or ADRs, are up about 13% so far this year, as they enter Wednesday trading on the New York Stock Exchange. It is estimated that the S&P 500SPX -0.33% and Dow Jones Industrial AverageDJIA -0.06% have risen about 8% and 3%, respectively, over the past week.

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Foreign stocks that are listed in the United States are called American Depository Receipts (ADRs).