By Mauro Orru

Volkswagen said tariffs, political uncertainty and geopolitical tensions could pressure its return on sales, cash flows and liquidity this year, striking a cautious tone as it seeks to gauge to what extent U.S. President Trump's tariffs could affect its operations.

The German carmaker confirmed its guidance for the year, but said a number of challenges--such as increasing trade restrictions, growing competition and more stringent emissions-related requirements--risked pushing some metrics toward the lower end of its forecasts.

The group is projecting sales growth of up to 5% this year, with an operating return on sales of 5.5% to 5.6%. Net cash flow at its automotive division should be between 2 billion and 5 billion euros ($2.28 billion-$5.69 billion), while net liquidity in the division is expected at 34 billion to 37 billion euros.

"Given the current volatile global economic situation, it is even more important to focus on the levers within our control," finance chief Arno Antlitz said.

Washington slapped 25% tariffs on global automotive imports into the U.S. on top of existing duties. Those tariffs, announced toward the end of March, went into effect early this month.

However, President Trump has now moved to soften the impact, preventing duties on foreign-made cars from stacking on top of other tariffs he imposed and easing some levies on foreign parts used to manufacture cars in the U.S.

The decision, which Trump described as "a little bit of help," means that carmakers paying automotive tariffs won't also be charged for other duties, such as those on steel and aluminum.

Tariffs represent the latest challenge for an industry that has been seeking to revive its fortunes amid a slow electric-vehicle market and fierce competition from Chinese rivals. Several European auto manufacturers lowered their profit and sales guidance last year.

Volkswagen entered 2025 after agreeing to a deal with its union to cut its workforce by more than 35,000 and slash billions of dollars a year in costs. The carmaker had 671,500 employees at the end of March.

The company posted 2.19 billion euros in after-tax profit for the three months to the end of March, down nearly 41% on year and below analysts' forecast of 2.24 billion euros, according to consensus estimates by Visible Alpha.

The company warned earlier this month that earnings had missed market expectations after taking a hit from one-off items, including the valuation of vehicles in transit to the U.S. following Trump's tariff announcement.

Volkswagen said operating profit slumped 37% to 2.87 billion euros, while its operating return on sales declined to 3.7% from 6%, both in line with preliminary figures.

Net cash flow at Volkswagen's automotive division was negative at 828 million euros and worse than analysts had expected. Sales grew 2.8% to 77.56 billion euros, also in line with preliminary figures.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

April 30, 2025 02:07 ET (06:07 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.