The Volkswagen Group posts healthy financial figures for the first half of the year, despite sales slipping.

• Sharp year-on-year rise in sales revenue to EUR 108.8 billion (EUR 98.8 billion); positive impact from exchange rates and mix effects
• Operating profit before special items rises to EUR 7.0 billion (EUR 6.2 billion)
• Equity-accounted profit of the Chinese joint ventures level year-on-year
• Net liquidity in Automotive Division increases to EUR 21.5 billion
• CEO Dr. Winterkorn: “Volkswagen very well positioned in an increasingly difficult market environment”

The Volkswagen Group reported considerable growth in sales revenue and earnings in the first six months of the year in a very challenging environment. Sales revenue rose by 10.1 percent to EUR 108.8 billion (EUR 98.8 billion) in the first half of the year, primarily due to exchange rate effects and an improved product mix. 

Operating profit before special items grew by 13.0 percent to EUR 7.0 billion (EUR 6.2 billion). Restructuring measures in the trucks business led to an operating profit after special items of EUR 6.8 billion (EUR 6.2 billion). The operating return on sales remained stable at 6.3 percent (6.3 percent). 

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. At EUR 2.7 billion (EUR 2.6 billion), the share of operating profit attributable to the Chinese joint ventures was level year-on-year in the first half of 2015.

“Our results for the first half of the year show that Volkswagen remains very well positioned in an increasingly difficult market environment and has a compelling product range,” said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg on Wednesday. 

“We are keeping a very close watch on global macroeconomic trends, especially where there are uncertainties such as in the Chinese, Brazilian and Russian markets.”

The Volkswagen Group’s profit before tax remained almost level at EUR 7.7 billion (EUR 7.8 billion) despite the negative effects from fair value measurement in the financial result. Profit after tax remained unchanged as against the prior-year period, at EUR 5.7 billion (EUR 5.7 billion).

“The difficult market environment and fierce competition, as well as interest rate and exchange rate volatility and fluctuations in raw materials prices all pose challenges. 

We are systematically implementing our efficiency program and are continuing to roll out the modular toolkits. We expect considerable positive effects in both instances,” said CFO Hans Dieter Pötsch.

Net liquidity in the Automotive Division remains high

The Automotive Division’s net cash flow increased considerably year-on-year to EUR 4.8 billion (EUR 2.9 billion) thanks to the Group’s robust business model. Net liquidity in the Automotive Division amounted to EUR 21.5 billion at the end of June (end of December:  EUR 17.6 billion). 

Liquidity was reduced by the capital increase in the Financial Services Division in the first quarter and the dividend payment in the second quarter, while the successful placement of hybrid notes strengthened the Automotive Division’s capital base. 

The Automotive Division’s investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) increased to EUR 4.7 billion (EUR 3.6 billion). The Volkswagen Group maintained its disciplined approach to investment with a ratio of capex to sales revenue in the Automotive Division of 4.9 percent (4.1 percent).

The Group invested primarily in production facilities and in the models to be launched in 2015 and 2016, as well as in the ecological focus of the model range.

Brands and Business Fields

Global new passenger car registrations increased between January and June 2015. However, trends in the individual regions were mixed. While growth was driven bythe Asia-Pacific, North America and Western Europe regions, new passenger car registrations in South America and Eastern Europe saw declines, some of which were severe.

Operating profit at Volkswagen Passenger Cars rose to EUR 1.4 billion (EUR 1.0 billion) due to sales revenue and cost optimization, as well as positive exchange rate effects. Although the markets in South America and Russia were negative factors, there were positive effects from the efficiency program. The operating margin amounted to 2.7 percent (2.1 percent).

Audi’s operating profit rose to EUR 2.9billion (EUR 2.7 billion) due to sales growth and positive exchange rate effects; its operating margin amounted to 9.8 percent (10.0 percent). High upfront investments in new products and technologies, as well as the expansion of the international production network, weighed on earnings.

Operating profit at ŠKODA increased to EUR 522 million (EUR 425 million), mainly due to mix effects, more favorable exchange rates and lower material costs. The operating margin was 8.1 percent (7.1 percent).

The SEAT brand continued its growth trend, lifting its operating profit to EUR 52 million (previous year: operating loss of EUR 37 million). This was primarily due to higher volumes, positive exchange rate effects and cost optimization.

Bentley generated an operating profit of EUR 54 million (EUR 95 million) due to lower vehicle sales and higher up front expenditures.

Porsche’s operating profit improved to EUR 1.7 billion (EUR 1.4 billion) and the brand’s operating margin was 15.7 percent (17.1 percent). Positive volume and exchange rate effects more than offset the negative impact of changes in the mix, increased structural costs and higher development costs.

Volkswagen Commercial Vehicles is renewing its product range and posted an operating profit of EUR 268 million (EUR 280 million). The operating margin amounted to 5.1 percent (5.9 percent).

Scania generated an operating profit of EUR 503 million (EUR 476million) and an operating return on sales of 9.7 percent (9.4 percent). MAN recorded an operating profit before restructuring expenses of EUR 185 million (EUR 222 million) and an operating return on sales of 2.8 percent (3.3 percent). Restructuring measures resulted in special items of EUR – 170 million.

Operating profit at Volkswagen Financial Services amounted to EUR 970 million (EUR 776 million). Its operating return on sales was 7.5 percent (7.4 percent). The number of new contracts signed worldwide rose by 6.4 percent year-on-year to 2.5 million.

Winterkorn: “Pressing ahead with new product initiatives”

Winterkorn believes that the Group is well positioned for the future: “We offer a comprehensive range of attractive, environmentally friendly, cutting-edge, high-quality vehicles. The Volkswagen Group’s brands will press ahead with their new product initiatives in 2015, modernizing and expanding their offering by introducing new models.”

The Volkswagen Group expects that deliveries to customers will remain on a level with the previous year in 2015 in a persistently challenging market environment. 

Depending on economic conditions, 2015 sales revenue for the Volkswagen Group and its business areas is expected to increase by up to four percent above the prior-year figure. However, economic trends in Latin America and Eastern Europe will need to be continuously monitored in the Commercial Vehicles/Power Engineering Business Area.

In terms of the Group’s operating profit, Volkswagen continues to anticipate an operating return on sales of between 5.5 percent and 6.5 percent in 2015. Volkswagen expects the operating return on sales to be in the 6.0 percent to 7.0 percent range in the Passenger Cars Business Area, and between 2.0 percent and 4.0 percent in the Commercial Vehicles/Power Engineering Business Area. 

For the Financial Services Division, Volkswagen is forecasting an operating profit at the prior-year level.

	2015	2014	%	2015	2014	%
	Q2	Q2		H1	H1
Volume data
Deliveries to customers
('000 units)	2,552	2,623	–2.7	5,039	5,066	–0.5
Vehicle sales (’000units)	2,483	2,645	–6.1	5,090	5,207	–2.2
Production (’000 units)	2,593	2,669	–2.8	5,314	5,234	+ 1.5
Employees
(’000 at June 30/Dec.31)				597.8	592.6	+ 0.9
Financial data
(IFRSs), EUR million
Sales revenue	56,041	50,977	+ 9.9	108,776	98,808	+ 10.1
Operating profit before
special items	3,662	3,330	+ 10.0	6,990	6,186	+ 13.0
Special items	–170	–	x	–170	–	x
Operating profit	3,492	3,330	+ 4.9	6,820	6,186	+ 10.3
as a percentage of sales revenue	6.2	6.5		6.3	6.3
Profit before tax	3,696	4,420	–16.4	7,664	7,777	–1.5
as a percentage of sales revenue	6.6	8.7		7.0	7.9
Profit after tax	2,731	3,249	–15.9	5,663	5,716	–0.9
Automotive Division
Cash flows
from operating activities	6,861	6,137	+ 11.8	11,553	8,388	+ 37.7
Cash flows from investing activities
attributable to operating activities*)	3,572	3,167	+ 12.8	6,761	5,469	+ 23.6
of which: capex	2,581	1,953	+ 32.1	4,652	3,578	+ 30.0
as a percentage of sales revenue	5.3	4.3		4.9	4.1
Net cash flow	3,288	2,970	+ 10.7	4,791	2,919	+ 64.2
Net liquidity
at June 30				21,489	13,979	+ 53.7
Net liquidity
at June 30/Dec. 31				21,489	17,639	+ 21.8