Volkswagen AG trimmed its profitability forecast for the year after earlier hedging losses were compounded by higher costs and supply-chain issues last quarter.

Europe’s biggest carmaker now sees operating profit level with last year at around €22.5 billion ($23.8 billion) but left unchanged its higher revenue forecast, it said Friday. This follows a reassessment of the value of hedging transactions, which are impacting VW’s expected result with a €2.5 billion loss.

The review effectively lowers the outlook to 7%, down from a 7.5% to 8.5% range, according to Bernstein analyst Daniel Roeska. VW didn’t specify a new forecast.

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The company reported preliminary third-quarter earnings that missed expectations on higher product costs for its volumes brands, a pressing issue for the nameplate VW brand where the company is scrambling to work out on a major efficiency plan to boost earnings. Flooding impacting a supplier in Slovenia also crimped vehicle output during the quarter.

VW’s revision and earnings miss follows Tesla Inc. Chief Executive Officer Elon Musk striking a cautious tone Thursday. The electric-car leader reported its first quarterly drop in sales this year while margins fell to the lowest in over four years. On a conference call, Musk repeatedly mentioned the impact of high interest rates on consumer confidence.

As demand challenges grow, VW already slowed EV output at some sites, including its Wolfsburg headquarters last month after the flooding in Slovenia. The carmaker last week said orders have fallen short of targets after weak demand particularly in Europe.

At the same time, VW is fighting to stay relevant in China’s EV market, which has been saturated by cheaper models from local producers.