Despite what it termed ‘the dramatic deterioration in its business environment’, the Volkswagen Group has said it met its unit sales, sales revenue and earnings targets last year and recorded the best figures in its history.
Sales revenue grew by 4.5% to EUR113.8bn on the back of a 1.3% rise in unit sales to 6.3m vehicles. At EUR6.3bn, VW said operating profit was up by 3.0% year-on-year. Profit after tax amounted to EUR4.7bn, 13.7% ahead of 2007.
“2008 was a good, a very successful year for Volkswagen. We made tremendous efforts throughout the entire company to achieve our ambitious targets, and we achieved them. The Volkswagen Group kept its word,” said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, on Thursday at the presentation of the Company’s 2008 financial results in Wolfsburg.
“The Volkswagen Group has proved that it can remain firmly on track even when the terrain is slippery. And that’s also our goal for the current year,” he continued. “We are already looking ahead to the period after the crisis. Because one thing is certain: the automotive markets will pick up again. And the Volkswagen Group is preparing very systematically for when this happens.”
With the Automotive Division recording its first-ever double-digit return on investment of 10.9% – following 9.5% in the previous year – Volkswagen again earned its cost of capital in 2008 and therefore also exceeded its own minimum required rate of return of 9%, it said.
“Our ability to develop new models with innovative technologies and our solid financial base mean that we are very well positioned compared with our competitors in the current crisis-ridden environment”, said CFO Hans Dieter Pötsch. “For the first time in the history of the Volkswagen Group, we reached a double-digit return on investment. This is an excellent achievement for our Company and impressively underscores the fact that we have systematically increased our operating earnings power, while maintaining our disciplined approach to investments”, said Pötsch.
Volkswagen Group grew its operating profit from EUR6.2bn in the previous year to EUR6.3bn in 2008. This, VW said, was driven primarily by the EUR1bn improvement in product costs.
“This is a good basis for meeting the challenges currently facing the automotive industry and further reinforcing our efforts”, said Pötsch. ”Thanks in particular to our systematic cost management and the optimization of our processes, we have been able to safeguard our earnings power and hence ensure the Group’s competitiveness in the long term”, he stressed. “Without the dramatic slump on the automotive markets, we would have lifted our results into an entirely new dimension”, added Winterkorn. Profit after tax rose by 13.7% to EUR4.7 billion.
VW said it remains committed to the goals it has set for 2018. “We want to ensure the company takes pole position in the automotive industry, we want the most satisfied customers and the best employees, and we want to grow very profitably worldwide,” said Winterkorn.
The VW Group plans to launch more than 20 additional completely new models by 2010.
However, the VW board cautioned that it believes that the business outlook for 2009 remains highly uncertain and entails considerable risks.
“An extremely difficult year lies ahead of us,” stressed Winterkorn.
VW Group’s sales revenue in 2009 will be below that of the previous year due to the declining unit sales situation. Rising refinancing costs and a worsening of the country mix will serve as an additional drag on earnings, VW admitted, adding that earnings will be lower.
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