Volkswagen's Restructuring Gets Unexpected OK

Dow Jones09-04

0533 GMT - Volkswagen's supervisory board unexpectedly and unanimously approved management's "brave" restructuring, which is a realistic decision for all concerned, Citi analysts write. The bank says that given Volkswagen's German plant competitiveness and lack of global revenue opportunities, the company simply had no other choice. The plan, which includes another 50,000 job cuts, will allow the company to reduce costs, lower the number of models, and trim investment spend by a further 6 billion euros a year. "This decision should further allow VW to continue to move capital to its highest-return brands and models, without the need to maintain excess capacity utilization." Citi rates Volkswagen at buy with a 94 euro target price. Shares closed at 77.10 euros.

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