Geoffrey Smith 

Investing.com — Volkswagen stock dropped in European morning trading on Thursday, after the second largest carmaker in the world said that deliveries fell 31% in March because of Russia’s conflict in Ukraine and continuing problems with its supply chain.

The company also cautioned about the potential financial impact of volatility in unpredictable commodity markets. It stated that these developments could have significant impacts on the value of hedging operations.

This warning is issued a day following JPMorgan’s (NYSE:) admission that it lost $120million due to the London Metals Exchange price surge. Other battery metals prices have also fluctuated so far in this year. VW did not provide any additional details about its exposures. 

Volkswagen preferred stock declined 1.6% in the wake of the news. This makes it the worst performer on the benchmark for the day. 

Deliveries were 31% lower at a group level in March, when 655,800 was reached. 

Its Kaluga, Russia plant was idled and supplies of wire harnesses were interrupted from Ukraine during the conflict. This resulted in deliveries dropping 43% in eastern Europe and 24% for western Europe. The company’s mass-market brands suffered the most, since it prioritized higher-margin Porsche or Audi business for limited inputs. 

Its operations in China were also severely disrupted by the spread of lockdowns at industrial and logistic facilities that are being used to combat the Covid-19 virus. China sales dropped 37% to 217 800 and may be under threat in the future after President Xi Jinping reaffirmed his country’s support for its vigorous “Dynamic Cleaning” campaign to fight the coronavirus. Nomura analysts believe that Covid-19 is currently limiting mobility in China, with nearly 400 million of them.

The worrying development in delivery has overshadowed the positive news that the company reported an operating profit of some 8.5 billion euros and an operating margin around 13.5% in its first quarter.