The Volkswagen Group has lowered its earnings forecast for the current year. This is due to billions in charges, including at the premium subsidiary Audi and high costs for workforce reductions at the core VW brand. The company announced this unexpectedly on Tuesday evening.

Instead of the previously forecasted 7.0 to 7.5 percent of revenue, Volkswagen now expects an operating profit of only 6.5 to 7.0 percent of revenue. The company anticipates charges amounting to 2.6 billion euros. This includes provisions of 0.9 billion euros for the personnel reduction at VW Passenger Cars. The remaining 1.7 billion euros pertain, among other things, to the restructuring or closure of the Audi plant in Brussels, where demand for the Q8 e-tron model family is weak.

Audi plans to initiate an information and consultation process with social partners at the Brussels site to find socially acceptable solutions. A shutdown of operations at the site is possible if no alternatives are found. Audi employs around 3,000 people in Brussels and is considering halting production of the Q8 e-tron and Q8 Sportback e-tron models ahead of schedule.

Additionally, currency losses due to the discontinuation of Volkswagen Bank's operations in Russia, as well as the planned closure of the gas turbine business of VW subsidiary MAN Energy Solutions, are impacting the results. The planned sale of the business to China was prohibited by the federal government for security reasons.

Volkswagen announced that it will present the figures for the second quarter on August 1. The provisions for termination agreements amounting to 0.9 billion euros are already included in the second quarter, while the remaining charges are expected to be recorded in the third quarter.

The brand groups Sport Luxury around the also publicly traded sports car manufacturer Porsche AG and the truck division around the commercial vehicle holding TRATON are not affected by the burdens. The group forecasts regarding the usual indicators besides the operating margin remain unchanged. For vehicle deliveries, VW continues to expect an increase of up to 3 percent and for revenue, an increase of up to 5 percent.

The shares of Volkswagen AG and Porsche SE reacted negatively to the announcement. On the Tradegate trading platform, Volkswagen preferred shares temporarily dropped 1.6 percent to 104.90 euros, while Porsche SE shares fell 0.63 percent to 42.40 euros.

Here's the heading translated to English:

"Another problem for Volkswagen arises in Russia. A court in Nizhny Novgorod sentenced VW to pay damages of 16.9 billion rubles (around 177 million euros) to the former partner Gaz. The reason for this is the termination of the cooperation following VW's withdrawal from Russia due to the Ukraine war. Production in the Gaz plants, where several VW and Skoda models were assembled, had previously been stopped. Volkswagen plans to appeal the verdict.

Despite these challenges, the Volkswagen Group remains optimistic about long-term growth prospects and continues to rely on a recovery in demand as well as on optimizing production structures to ensure competitiveness.