Saturday, 25 February 2017

Volkswagen shows it can ride out diesel crisis

Volkswagen Group is making progress despite the diesel crisis with sales revenue exceeding expectations, increasing by €4.0 billion to €217.3 billion. Group's operating result before special items reached €14.6 billion.
At €7.1 billion, the Group's operating result, which had slipped into the red in the previous year due to the diesel issue, was back in strongly positive territory. Before special items, the Group's operating result reached a new record and at EUR 14.6 billion was substantially higher than the prior-year figure (up 14 per cent); the operating return on sales rose to 6.7 (6) per cent.
"While the past fiscal year posed major challenges for us, despite the crisis the Group's operating business gave its best-ever performance," chief executive Matthias Müller said in Wolfsburg. "As the figures show, Volkswagen is very solidly positioned in both operational and financial terms. This makes us optimistic about the future."
He went on, "The Group's new structure with more decentralized responsibility will strengthen our brands and regions and increase our proximity to customers. We will become faster and more focused and efficient. This will enable us to make much more focused use of the strengths of our multi-brand group and its potential for synergies."
In spite of further challenges resulting from the diesel issue and the persistently difficult conditions in vehicle markets such as Brazil and Russia, the Group delivered 10.3 million vehicles to customers worldwide in the past fiscal year.
The Group reached its targets for 2016 but a new record, helped by increases in Western and Central European markets and in the Asia-Pacific region. Improvements in the mix and the vigorous financial services business were the main contributing factors to the increase in the Group's sales revenue (up 1.9 per cent), more than offsetting negative exchange rate effects and declining unit sales in individual regions.
Profit attributable to the Chinese joint ventures was down slightly in the reporting period, as expected. The business of the Chinese joint ventures is not included in the Group's sales revenue and operating profit because it is accounted for in the financial result using the equity method.
In 2016, the Group's earnings before and after tax, amounting to €7.3 billion and €5.4 billion respectively, were again in strongly positive territory. The Group claims its financial situation remains “robust”. Amounting to €.2 billion at year-end, net liquidity in the Automotive Division was up €2.7 billion on the prior-year figure. The lion's share (€6.4 billion) of the special items arising from known risks in the reporting period was attributable to the diesel issue, especially for hedging of legal risks.
"In spite of the charges and the challenges arising from the diesel crisis, we can be satisfied on the whole with the Group's business development and economic position," said chief financial officer Frank Witter, commenting on the annual financial statements. "I am confident that the Volkswagen Group will overcome the present challenges. We must use great discipline to achieve the set targets in all divisions, in order to return to the path of success in the coming years."
 Müller underlined that with its future program TOGETHER – Strategy 2025 the Group attached great importance to its responsibility in relation to the environment, safety and society.
"The commitment and considerable technical expertise of our staff are the basis for successfully shaping the transformation into a leading international provider of sustainable mobility," Müller said.
The Board of Management and Supervisory Board will propose to pay a dividend of €2.00 (previous year: €0.11) per ordinary share and €2.06 (previous year: €0.17) per preferred share at the Annual General Meeting on 10 May 10 2017.
Cash flows from operating activities stood at €20,271 million compared with €23,796 million. Cash flows from investing activities and attributable to operating activities were €15,941 million compared with €14,909 million. The net liquidity as at December 31 2016 was € 27,180 million compared with €24,522 million.
As for the prospects for 2017, the company says it expects the global economy to record slightly higher growth in 2017 than in the previous year. The Group anticipates the strongest rates of expansion in Asia's emerging economies.
It expects trends in the passenger car markets in the individual regions to be mixed in 2017. Overall, growth in global demand for new vehicles will probably be slower than in the reporting period.

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