Volkswagen Group has swung to an operating loss of EUR4.1bn in 2015 after setting aside more than EUR16bn in provisions for additional costs associated with the consequences of its exhaust emissions problems.
VW said that consolidated sales revenue last year was up 5.4% year-on-year to EUR213.3bn and that operating profit before special items was slightly higher than prior-year figure at EUR12.8bn.
Go deeper with GlobalData
However, it posted a 2015 operating loss of 4.1bn (in 2014, it posted an operating profit of EUR12.7bn) due to negative special items totalling EUR16.9bn. VW said that the largest share of the special items amounting to EUR16.2bnn comprises “provisions for the emissions issue, among other things for pending technical modifications and customer-related measures as well as global legal risks”. This, it said, takes account of the identifiable risks in the 2015 annual financial statements in connection with the emissions issue.
“The Volkswagen Group’s operations are in great shape, as the figures before special items for the past fiscal year clearly show,” said CEO Matthias Müller in a statement. “Were it not for the sizable provisions we made for all repercussions of the emissions issue that are now quantifiable, we would be reporting on yet another successful year overall. The current crisis – as the figures presented today also reveal – is having a huge impact on Volkswagen’s financial position. Yet we have the firm intention and the means to handle the difficult situation we are in using our own resources,” Müller added.
Earlier this week, VW reached agreement in principle with the US federal Department of Justice on a plan to deal with the excess emissions in nearly 600,000 diesel vehicles sold in the US which would include a buyback offer.
Due to the high extraordinary charges, the Volkswagen Group recorded a consolidated loss before and after tax of EUR1.3bn and EUR1.4bn, respectively.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataVW also said that its liquidity and overall financial situation is favourable. It said the sale of the shares in Suzuki, among other things, added a total of EUR2.8bn billion to the Automotive Division’s net cash flow, lifting it to EUR8.9bn. Net liquidity in the Automotive Division rose to EUR24.5bn.
Sales revenue could be down 5% in fiscal 2016
VW said that its Board of Management estimates that, on the whole, “deliveries to customers of the Volkswagen Group in fiscal year 2016 will be on a level with the past year due to volume growth in China”. Depending on the economic conditions – particularly in South America and Russia – and the exchange rate development and in light of the emissions issue, the Board of Management expects that sales revenue for the Volkswagen Group may be down by as much as 5 percent on the previous year. In terms of the Group’s operating profit, the Board of Management anticipates an operating return on sales of between 5.0 and 6.0 percent.
In addition to the emissions issue, VW said the highly competitive environment as well as interest rate and exchange rate volatility and fluctuations in raw materials prices all pose challenges. “We anticipate a positive effect from the efficiency programs implemented by all brands and from the modular toolkits,” VW said. In terms of the Group’s operating profit, VW said it anticipates an operating return on sales of between 5.0 and 6.0 percent in 2016.
VW warned that in the Passenger Cars Business Area it expects a “sharp decrease in sales revenue, with an operating return on sales in the region of 5.5 – 6.5 percent”.
“This year we are again operating in an exceedingly challenging environment in which global demand for new vehicles is declining, exchange rates and interest rates remain highly volatile and competition in many of our markets is intensifying. Added to this is the emissions issue, the extensive clarification of which will also be a dominant feature of the Volkswagen Group’s work in the current year,” Chief Financial Officer Frank Witter said. “Regardless of this, we are confident that the Volkswagen Group will make good progress on its chosen path.”
See also:
VW agrees emissions deal “in principle” with US Justice – report
COMMENT: VW agrees a deal with the US
