Volkswagen Group has posted a positive set of quarterly financial results that exceeded analyst expectations, despite incurring additional costs connected with ‘dieselgate’ fallout .
Underlying second quarter operating profit – before adjustment for special items – was posted at EUR4,549m, 22.7% ahead of the same quarter last year. However, special items in the second quarter – in connection with the diesel crisis (recalls and compensation) – were over EUR1.6bn.
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For the first half of the year as a whole VW Group posted record figures for deliveries, sales revenue and earnings (before special items). In the period from January to June, VW Group sales revenue rose from EUR115.3bn to EUR 119.4bn year-on-year. H1 operating profit before special items increased from EUR8.9bn to EUR9.8bn (with expenditures of EUR 1.6 billion in connection with the diesel crisis booked in Q2r.
The operating return on sales before special items rose from 7.7 to 8.2 percent. The VW Group’s profit after tax for the first six months was up 2.1% year-on-year to EUR 6.6 billion.
“We cannot rest on our laurels…” – Diess
“The Volkswagen Group performed successfully in the first half of the year, with very solid growth in sales revenue and earnings. We also delivered more vehicles than ever before,” said Dr. Herbert Diess, CEO of Volkswagen AG. “However, we cannot rest on our laurels because great challenges lie ahead of us in the coming quarters – especially regarding the transition to the new WLTP test procedure. Growing protectionism also poses major challenges for the globally integrated automotive industry.”
Globally, the Volkswagen Group delivered 5.5m vehicles to customers in the first half of 2018, 7.8% ahead of the prior-year period. CEO Diess said: “The growth demonstrates that the many new models rolled out by our Group brands win customers over completely. Over the coming months, we will do everything in our power to validate the trust of our customers worldwide. Our stated goal is to transform Volkswagen into our industry’s leading company in terms of profitability, innovative power, sustainability and customer satisfaction.”
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By GlobalDataThe big brands – SEAT stands out
Sales revenue for the Volkswagen Passenger Cars brand in the first six months of 2018 was up 7.7% year-on-year at EUR42.7bn. The operating profit before special items was EUR2.1bn (EUR1.8bn last year). VW said that higher volumes and improved product costs had a positive effect. However, this was offset by higher distribution costs resulting from, among other things, the scrapping premium and upfront expenditures for new products, especially in connection with the implementation of the electrification campaign. The diesel issue was mainly an issue for the VW brand and gave rise to special items of EUR –1.6 billion.
Sales revenue for the Audi brand increased during the first half of 2018 was up to EUR31.2bn (EUR30.0bn last year. In particular, higher volumes, efficiency gains and ‘forward-looking currency management’ raised the operating profit to EUR2.8bn (EUR2.7bn last year). The financial key performance indicators for the Audi brand also include the Lamborghini and Ducati brands.
At EUR9.2bn, sales revenue for ŠKODA in the reporting period was up 5.1% year-on-year. Due to negative exchange rate effects and higher upfront expenditures for new products, the operating profit declined by 4.5 percent to EUR821m, while volume improvements and optimisation of costs had a positive impact.
At EUR5.8bn, sales revenue for the SEAT brand was 14.5% higher than in the same period of the previous year. Operating profit improved by 62.7% to EUR212million. Positive volume, price and mix effects considerably outweighed upfront expenditures for new products and exchange rate effects.
2018 full-year prospects
For the year as a whole, the VW Group expects deliveries to customers of the Volkswagen Group in 2018 to ‘moderately exceed the prior-year figure amid continuously challenging market conditions’. It said challenges in the current fiscal year will arise mainly from the economic situation, increasing competition, exchange rate volatility and the diesel issue. In the EU, it warned that there is also a new, more time-consuming test procedure for determining pollutant and CO2 emissions as well as fuel consumption in passenger cars and light commercial vehicles (WLTP).
Sales revenue for the Volkswagen Group is expected to be up by as much as five percent on the prior-year figure. An operating return on sales before special items of between 6.5 and 7.5 percent is anticipated for the operating return on sales.
