Friday, 14 March 2014
VW results reveal winners and losers
2013 was an extremely challenging year for European automakers in particular, including the Volkswagen Group.
“We were not helped by our home market or by exchange rates. Nevertheless, Volkswagen Group not only met but beat its targets for 2013 despite the challenging competitive environment." said Prof. Dr. Martin Winterkorn, chairman of the board of management of Volkswagen AG.
Winterkorn said VW will now focus even more strongly on qualitative growth, with a particular emphasis on earnings quality, quality in development and people quality.
According to Winterkorn, VW already holds the key to sustainably strengthening its earnings quality in the shape of its modular toolkits. Rolling out the toolkit strategy across the Group in the coming years would be a unique achievement in the automotive industry.
"As volumes grow and new models are added, we will also see increasingly positive earnings effects", he claimed.
Winterkorn announced plans to speed up the innovation engine even higher. The Volkswagen Group spent over €10 billion on research and development last year - more than any other manufacturer in the world.
Enhancing people quality means in particular increasing knowledge transfer. Winterkorn believes that the Group's greatest asset is the knowledge of its approximately 570,000 employees - and that this must be safeguarded and built on.
At the same time, VW will acquire new knowledge through its cooperation with around 280 universities and research institutes worldwide.
"Sharing knowledge leads to new knowledge. This enables us to secure our technology leadership and business success in the future as well", said Winterkorn.
The Volkswagen Group's sales revenue increased by 2.2 per cent to €197.0 billion in fiscal year 2013 (previous year: €192.7 billion). The Group's operating profit rose slightly to a record €11.7 billion (€11.5 billion). Deliveries grew 4.9 per cent last year to more than 9.7 million vehicles (9.3 million).
The Group's delivery figures include all vehicles manufactured and sold by its Chinese joint ventures, which exceeded three million units for the first time last year.
By contrast, the Group's sales revenue and operating profit do not include the Chinese joint ventures. Their businesses have always been accounted for in the financial result using the equity method and are therefore not included in consolidated operating profit.
The proportionate share of their operating profit rose to approximately €4.3 billion (€3.7 billion) in 2013. If this figure were included, the Group's profit per vehicle delivered would have been significantly higher.
The financial result declined to €0.8 billion against €14.0 billion last year. The 2012 figure was positively impacted by the integration of Porsche (€12.3 billion).
Overall, the Volkswagen Group's profit before tax was approximately €12.4 billion last year (€25.5 billion). Measurement effects in connection with the integration of Porsche also had a positive impact on profit before tax in 2012. The Group's profit after tax was €9.1 billion (€21.9 billion).
Return on investment for the Automotive Division was 14.5 per cent, well above the minimum required rate of return of 9 per cent. The return on equity before tax in the Financial Services Division rose slightly to 14.3 per cent (13.1 per cent).
Net liquidity in the Automotive Division remained sound at €16.9 billion as of the end of December 2013 (year-end 2012: €10.6 billion) thanks to the robust business model and net cash flow of €4.4 billion. The company claims this gives the Group the necessary financial stability and flexibility to be able to maintain its profitable growth and to continue systematically implementing its Strategy 2018.
The ratio of investments in property, plant and equipment (capex) to sales revenue rose slightly by 0.4 per cent to 6.3 per cent. Volkswagen therefore remains at a competitive level within its target corridor of six to seven per cent. Alongside its production facilities, Volkswagen invested mainly in the expansion and ecological focus of its model range, the use of electric drives and the modular toolkits.
The Volkswagen Passenger Cars brand generated sales revenue of €99.4 billion (€103.9 billion) in 2013. It fell short of prior-year figures by 4.4 per cent due to exchange rate and volume-related factors. Lower unit sales and upfront expenditures for new technologies in particular affected operating profit, which amounted to €2.9 billion (€3.6 billion). These figures for sales revenue, operating profit and unit sales do not include the Chinese joint ventures.
At €49.9 billion (€48.8 billion), Audi's sales revenue exceeded the prior-year figure by 2.3 per cent despite negative currency effects. Operating profit amounted to €5 billion (€5.4 billion).
This decline is attributable to upfront expenditures for new products and technologies, costs associated with the systematic expansion of the international production network and the challenging environment in many markets. The brand generated an operating return on sales of 10.1 per cent (11.0 per cent).
ŠKODA recorded sales revenue of €10.3 billion (€10.4 billion) in 2013. Negative volume, mix and exchange rate effects were the reasons behind the decline in operating profit to €522 million (€712 million).
SEAT recorded sales revenue of €6.9 billion (€6.5 billion) in 2013. The operating result improved by €4 million to -€152 million.
Bentley generated sales revenue of €1.7 billion (€1.5 billion) between January and December 2013. Bentley's operating profit rose by 66.9 per cent to €168 million due to higher volumes and positive exchange rate and mix effects.
Porsche recorded sales revenue of €14.3 billion in 2013. Its operating profit amounted to €2.6 billion, while the operating return on sales was 18.0 per cent.
Sales revenue generated by Volkswagen Commercial Vehicles reached the prior-year level in 2013 at €9.4 billion (€9.5 billion). Its operating profit rose by 6.4 per cent to €448 million (€421 million) as a result of successful cost optimisation measures.
Truck builder Scania recorded sales revenue of €10.4 billion (€9.3 billion). Its operating profit increased from €930 million to €974 million.
Truck builder MAN generated sales revenue of €15.9 billion (€16.0 billion) and recorded an operating profit of €319 million (€813 million), which was mainly impacted in the Power Engineering area by lower volumes, tougher competitive pressure, declining revenue from the license business and in particular by the recognition of project-specific contingency reserves.
Volkswagen Financial Services generated an operating profit of €1.6 billion (€1.4 billion) in 2013. The division signed 4.3 million new financing, leasing and service/insurance contracts worldwide (up 13.4 per cent).
In terms of the Group's operating profit, Volkswagen is expecting an operating return on sales of between 5.5 per cent and 6.5 per cent in 2014 in light of the challenging economic environment, and the same range for the Passenger Cars Business Area. The Commercial Vehicles/Power Engineering Business Area is likely to moderately exceed the 2013 figure. Volkswagen expects the operating return on sales in the Financial Services Division to be between 8.0 per cent and 9.0 per cent. ∎