Despite the impact of ‘dieselgate’ Volkswagen Group generated an operating profit before special items of EUR11.3 (10.2)bn in the first nine months of the year, representing an increase of 10.5%.
Porsche and Skoda lifted VW Group earnings, while Volkswagen brand sales were down.
The sales revenue of EUR159.9bn was on a level with the previous year and the operating return on sales before special items amounted to 7.0 (6.4)%. However, earnings in the third quarter were impacted by further provisions in connection with the diesel issue of EUR0.4bn. For the period January to September, operating profit after special items amounted to EUR8.6 (3.3)bn. Profit after tax was EUR5.9 (4.0)bn.
“The figures for the first three quarters show the operational strength of the alliance of brands in the Volkswagen Group”, said Matthias Müller, chairman of the board of management of Volkswagen Aktiengesellschaft, commenting on the quarterly report. “This is a robust base on which we intend to push forward with our planned transformation from car manufacturer to provider of sustainable mobility. In ‘Together – Strategy 2025’, we have laid out a compelling plan for this transition. As our future program and the latest quarterly results prove, the Volkswagen Group remains fully operational in spite of the present pressures.”
Chief financial officer Frank Witter also emphasized how the Group’s solid financial position is a vitally important factor in its continuing success: “Despite major challenges and the negative impact of the diesel issue, the Volkswagen Group remains on a solid financial footing.” As Witter explained: “Our net liquidity gives us the financial stability to actively shape the future of mobility while coping simultaneously with the financial repercussions of the diesel issue and the investments and outlay required for CO2 compliance and new technologies.” The impact of the diesel issue, in particular, required a systematic, disciplined approach to investments and costs, he continued, “But further significant improvements in productivity and profitability are needed across the whole Group. The Volkswagen brand’s ‘pact for the future’ is of crucial importance for the future of the entire Group.”
The Group’s operating profit and sales revenue exclude the activities of the Chinese joint ventures, which are accounted for in the financial result using the equity method. The share of operating profit attributable to the Chinese joint ventures to the end of September 2016 remained stable at EUR3.6 (3.8)bn.
Net liquidity in the Automotive Division rises to EUR31.1bn
Net liquidity in the Group’s Automotive Division increased to EUR31.1bn at the end of September (compared to EUR24.5bn at the end of December 2015). The Automotive Division’s investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) rose from EUR7.3bn to EUR7.8bn in the first three quarters. The ratio of capex to sales revenue in the Automotive Division amounted to 5.7 %.
Brands and business fields
The Volkswagen passenger cars brand’s unit sales of 3.2 (3.3)m vehicles in the first nine months of 2016 fell short of the prior-year level. Operating profit before special items decreased to EUR1.2 (2.2)bn. The decrease is primarily attributable to volume, mix and exchange rate effects as well as higher marketing costs as a consequence of the emissions issue. By contrast, cost savings had a positive effect.
Audi increased its unit sales by 0.7% year-on-year in the reporting period to 1.2m vehicles worldwide. Our Chinese joint venture FAW-Volkswagen sold a further 411,000 Audi vehicles. At EUR3.9 (4.0)bn, operating profit before special items reached the 2015 level. In addition to exchange rate effects and intense competition, the expansion of the model and technology portfolio and the international production network had a negative impact on earnings.
The Skoda brand sold 606,000 vehicles in the first three quarters of this year, once again more than a year earlier. Operating profit improved by 28.1% to EUR940m mainly on the back of positive volume and mix effects as well as optimized product costs.
Despite the modifications at the Martorell plant, the Seat brand’s unit sales of 400,000 vehicles in the reporting period were at the prior-year level. At EUR137m, operating profit was EUR125m higher than in 2015, with cost reductions and mix improvements more than compensating for negative exchange rate effects.
The Bentley brand increased its unit sales by 6.1% year-on-year between January and September 2016, primarily due to the popularity of the new Bentayga. Due to positive effects from exchange rates and cost-cutting measures, operating profit was on a level with the previous year at EUR54 (57)m in spite of changed market conditions.
The Porsche brand lifted its vehicle sales by 5.0% year-on-year in the first three quarters of 2016 to 177,000 units worldwide. Operating profit climbed 12.2% to EUR2.9bn. Here too, the rise was mainly attributable to volume, mix and exchange rate effects.
Volkswagen Commercial Vehicles sold 342,000 vehicles worldwide in the first nine months of 2016. At EUR8.0bn, sales revenue was up 6.7% over the prior-year period. Operating profit rose by EUR79m to EUR392m, as a result of higher volumes and mix effects as well as optimized product costs.
Unit sales by the Scania brand amounted to 60,000 trucks and buses in the first three quarters of 2016. Higher sales figures in Europe offset the decline in demand in Turkey, South America and Russia. At Scania, operating profit before special items amounted to EUR802 (748)m.
As in the previous year, MAN Commercial Vehicles sold 74,000 units in the period from January to September of this year. Operating profit before special items rose to EUR204 (52)m. Volume effects and improved margins in Europe as well as the structural improvements introduced had a positive effect.
MAN Power Engineering’s sales revenue decreased by 6.9% year-on-year to EUR2.6bn in the first nine months of 2016. This reduced the operating profit by EUR51m to EUR176m.
At EUR1.5bn, the operating profit at Volkswagen Financial Services in the reporting period was 11.1% higher than in the previous year. The number of financing, leasing, service and insurance contracts signed in the reporting period rose by 14.6% to 4.9m. The total number of contracts was 15.8m as of September 30, 2016, surpassing the 2015 year-end figure by 7.8%.
Deliveries to customers: Q3 2016 – 2,493,000 units; Q3 2015 – 2,392,000 units; change – 4.2%; YTD 2016 – 7,609,000 units; YTD 2015 – 7,431,000 units; change – 2.4%
Vehicle sales: Q3 2016 – 2,454,000 units; Q3 2015 – 2,350,000 units; change – 4.4%; YTD 2016 – 7,653,000 units; YTD 2015 – 7,440,000 units; change – 2.9%
Production: Q3 2016 – 2,377,000 units; Q3 2015 – 2,125,000 units; change – 11.9%; YTD 2016 – 7,645,000 units; YTD 2015 – 7,438,000 units; change – 2.8%
Employees (at 30 September/31 December): YTD 2016 – 624; YTD 2015 – 610.1; change – 2.3%
Financial data: IFRSs
Total sales revenue: Q3 2016 – EUR 51,997m; Q3 2015 – EUR51,487m; change – 1%; YTD 2016 – EUR159,932m; YTD 2015 – EUR160,263m; change – -0.2%
Operating profit before
Special items: Q3 2016 – EUR 3,750m; Q3 2015 – EUR3,206m; change – 17%; YTD 2016 – EUR11,267m; YTD 2015 – EUR10,197m; change – 10.5%
Special items: Q3 2016 – EUR -442m; Q3 2015 – EUR-6,685m; change – -93.4%; YTD 2016 – EUR-2,620m; YTD 2015 – EUR-6,855m; change – -61.8%
Operating profit: Q3 2016 – EUR 3,308m; Q3 2015 – EUR-3,479m; YTD 2016 – EUR8,647m; YTD 2015 – EUR3,342m
As a percentage of sales revenue: Q3 2016 – 6.4%; Q3 2015 – -6.8%; YTD 2016 – 5.4%; YTD 2015 – 2.1%
Profit before tax: Q3 2016 – EUR 3,348m; Q3 2015 – EUR-2,522m; YTD 2016 – EUR8,159m; YTD 2015 – EUR5,142m; change – 58.7%
As a percentage of sales revenue: Q3 2016 – 6.4%; Q3 2015 – -4.9%; YTD 2016 – 5.1%; YTD 2015 – 3.2%
Profit after tax: Q3 2016 – EUR 2,337m; Q3 2015 – EUR-1,673m; YTD 2016 – EUR5,915m; YTD 2015 – EUR3,990m; change – 48.2%
Automotive Division: Cash flows
From operating activities: Q3 2016 – EUR 7,262m; Q3 2015 – EUR7,629m; change – -4.8%; YTD 2016 – EUR16,998m; YTD 2015 – EUR18,445m; change – -7.9%
From investing activities
Attributable to operating activities: Q3 2016 – EUR 4,893m; Q3 2015 – EUR507m; YTD 2016 – EUR9,495m; YTD 2015 – EUR7,220m; change – 31.5%
Of which: capex: Q3 2016 – EUR 3,288m; Q3 2015 – EUR2,688m; change – 22.3%; YTD 2016 – EUR7,803m; YTD 2015 – EUR7,340m; change – 6.3%
As a percentage of sales revenue: Q3 2016 – 7.4%; Q3 2015 – 6.1%; YTD 2016 – 5.7%; YTD 2015 – 5.3%
Net cash flow: Q3 2016 – EUR 2,369m; Q3 2015 – EUR7,122m; change – -66.7%; YTD 2016 – EUR7,504m; YTD 2015 – EUR11,235m; change – -33.2%
Net liquidity at 30 September: YTD 2016 – EUR31,115m; YTD 2015 – EUR27,755m; change – 12.1%
Net liquidity at 30 September/31 December: YTD 2016 – EUR31,115m; YTD 2015 – EUR24,522m