Volkswagen Group has lowered its projection for 2019 sales due to slower global demand. The company now expects deliveries to be flat on last year – previously it had forecast a slight rise. Nevertheless, in its latest results posting the company said operating profit and revenue was up in the first nine months of the year.
Between January and September sales revenue grew by 6.9 percent year-on-year to EUR 186.6 (174.6) billion.
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Operating profit before special items increased significantly by 11.2 percent to EUR 14.8 (13.3) billion, mainly due to improvements in the mix and in the fair value on derivatives. The operating return on sales before special items stood at 7.9 (7.6) percent. Special items, which were due to legal risks in connection with the diesel issue, amounted to EUR -1.3 (-2.4) billion after nine months. Operating profit (after special items) improved by 24.5 percent to EUR 13.5 (10.9) billion, bringing the operating return on sales up to 7.3 (6.2) percent. Profit before tax rose by 16.9 percent to EUR 14.6 billion.
“The Volkswagen Group achieves a good performance amid a challenging market environment. The performance in the first nine months of the financial year makes us optimistic that we will achieve our full-year targets for 2019,” said Frank Witter, Member of the Board of Management of Volkswagen AG responsible for Finance and IT. “Continuous improvement in our profitability is key to mastering our ongoing transformation on our own. We will continue to work systematically towards this goal.”
Outlook
VW said it anticipates that vehicle markets will contract faster than previously anticipated in many regions of the world this year. In view of this situation, Volkswagen now expects deliveries to customers in 2019 to be on a level with the previous year (a slight increase had been expected). The group nevertheless confirmed its forecasts for sales revenue and profit: it said the Volkswagen Group’s sales revenue will exceed the prior-year figure by as much as 5 percent. In terms of the group’s operating profit before special items, an operating return on sales of between 6.5 and 7.5 percent is predicted. Including special items, the group projects an operating return on sales at the lower end of the range announced.
Brands and business areas
The Volkswagen Passenger Cars brand sold 2.8 (2.8) million vehicles in the first nine months of this year. Higher demand was recorded in particular for the T-Roc, Tiguan, Touareg and Atlas models. The new T-Cross was very well received by the market. Sales revenue increased by 4.7 percent year-on-year to EUR 65.4 billion. Operating profit before special items climbed to EUR 3.2 (2.3) billion. Improvements particularly in the mix and price positioning compensated for lower sales of the models from Volkswagen Passenger Cars and negative exchange rate effects. The diesel issue resulted in special items of EUR -0.7 billion in the first nine months of the year.
The Audi brand sold 900 (1,107) thousand vehicles worldwide between January and September 2019. Sales revenue slipped to EUR 41.3 (44.3) billion, particularly due to the reallocation of multibrand importers within the Group. Negative effects resulting from WLTP-related lower volumes, model launches and phase-outs, higher upfront expenditure for new products and technologies as well as personnel cost increases reduced operating profit to EUR 3.2 (3.7) billion. Improvements in the mix and product costs had a positive impact. The financial key performance indicators for the Audi brand include Lamborghini and Ducati.
The ŠKODA brand lifted its unit sales to 805 thousand vehicles in the reporting period, 15.3 percent more than a year before. Sales revenue was up 17.6 percent on the prior-year period at EUR 14.8 billion. At EUR 1.2 billion, operating profit was EUR 92 million higher than in the previous year. Volume increases, mix optimizations and pricing measures more than compensated for negative effects resulting from cost increases, exchange rates and higher upfront expenditure for new products.
The SEAT brand sold 517 thousand vehicles in the first nine months of 2019, an increase of 11.8 percent on the previous year. At EUR 8.8 billion, sales revenue gained 14.0 percent on the good prior-year figure. Operating profit improved by 4.2 percent to EUR 248 million due to volume and mix effects. Meanwhile, cost increases had a negative impact.
The Bentley brand lifted its unit sales in the reporting period to 7,224 (6,654) vehicles. Sales revenue increased to EUR 1.3 (1.1) billion. Operating profit improved to EUR 65 (-137) million.
Porsche sold 205 thousand vehicles worldwide from January to September 2019, 7.7 percent more than in the prior-year period. Sales revenue amounted to EUR 18.7 (17.5) billion. At EUR 3.2 (3.2) billion, the operating result before special items was on a level with the previous year.
Global sales at Volkswagen Commercial Vehicles amounted to 344 (337) thousand vehicles in the first nine months of 2019. Sales revenue was up 2.1 percent on the prior-year period at EUR 8.8 billion. Higher fixed and development costs for new products reduced operating profit to EUR 497 million, a decrease of 20.9 percent.
Scania Vehicles and Services increased its unit sales during the reporting period to 76 (69) thousand vehicles. Sales revenue increased to EUR 10.4 (9.3) billion. Operating profit improved to EUR 1.2 (0.9) billion. In addition to higher vehicles sales and a stronger genuine parts and service business, improvements in the mix as well as exchange rate effects had a positive impact on profit.
MAN Commercial Vehicles sold 104 thousand units in the first three quarters of this year, exceeding the prior-year figure by 6.8 percent. Sales revenue amounted to EUR 9.2 (8.6) billion. Operating profit showed an improvement on the previous year at EUR 297 (222) million.
Power Engineering generated sales revenue of EUR 2.9 (2.5) billion between January and September 2019. At EUR 91 (142) million, the operating result declined due to expenses and mix effects.
The operating profit of Volkswagen Financial Services improved by 6.2 percent to EUR 2.0 billion in the first nine months of 2019, driven by growth in business and exchange rate effects.
