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Volkswagen AG shares dipped early Wednesday after the company said 2022 free cash flow missed expectations due to supply-chain snags that led to higher unsold inventory at year-end.
The German car maker
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said free cash flow for 2022 came in at 5 billion euros ($5.36 billion), below its goal of matching the prior-year’s EUR8.6 billion. Other metrics were in line with expectations.
At 0942 GMT, shares were 0.7% lower at EUR130.34, after falling more than 2% earlier in the session.
Analysts said they didn’t expect Volkswagen shares to take too much of a beating on missing its FCF target, noting other manufacturers have faced similar issues and the situation is likely to improve over the course of the year.
The lower-than-expected cash flow was due to an unstable supply situation and logistics disruptions, mainly toward the end of the year, Volkswagen said. That resulted in higher-than-expected working capital and inventories of finished goods, it said.
Volkswagen expects the headwinds affecting cash flow to ease over the course of 2023.
The company isn’t alone in facing logistics challenges related to getting finished inventories to dealers at year-end, RBC Capital Markets analyst Tom Narayan said in a research note.
“Other European OEMs have also communicated similar supply chain issues,” Citi analysts also said in a note.
While not good news, the analysts from RBC and Citi said they don’t expect the market to react too harshly on the 2022 FCF pre-release.
RBC said that Volkswagen peer Stellantis NV likely faced similar working capital headwinds in the fourth quarter, and noted that parts supplier Aptiv PLC last week said supply constraints are easing. Input from other car makers leads the Canadian bank to expect that the inventory situation improves this year.
Write to Christian Moess Laursen at christian.moess@wsj.com
