Volkswagen Reports New Records in Unit Sales, Sales Revenue and Earnings in Fiscal Year 2014

The Volkswagen Group improved its earnings strength again in 2014 and continued along its qualitative growth path despite major economic challenges. With sales revenue of EUR 202.5 billion (previous year: EUR 197.0 billion) and an Operating profit of EUR 12.7 billion (EUR 11.7 billion), the Group generated new record highs. This was announced by Volkswagen Aktiengesellschaft this Friday on conclusion of the Supervisory Board meeting.

The operating margin improved to 6.3 percent (5.9 percent), reaching the upper end of the forecast range of 5.5 percent to 6.5 percent. The Group’s profit before tax increased to EUR 14.8 billion (EUR 12.4 billion), while the return on sales before tax rose from 6.3 percent to 7.3 percent. The equity-accounted profit of the Chinese joint ventures exceeded the high prior-year figure. The activities of the Chinese joint ventures have always been accounted for in the financial result using the equity method and are therefore not included in the Group’s sales revenue and operating profit.

“We can look back on the past fiscal year with satisfaction: despite the difficult economic environment, we achieved our goals for 2014. At the same time, our forward-looking efficiency program “Future Tracks” has laid the groundwork that will enable us to continue our successful trajectory with all our strength”, said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg on Friday.

Profit after tax came in at EUR 11.1 billion (EUR 9.1 billion). Net cash flow in the Automotive Division increased by EUR 1.7 billion to EUR 6.1 billion thanks to the robust business model. Net liquidity in the Automotive Division rose to EUR 17.6 billion (EUR 16.9 billion) as of year-end 2014.

In light of the successful fiscal year, the Board of Management and the Supervisory Board will be proposing to the Annual General Meeting to increase the dividend by 20 percent to EUR 4.80 (EUR 4.00) per ordinary share and EUR 4.86 (EUR 4.06) per preferred share. This would result in a distribution ratio of 21.2 percent (20.6 percent). The medium-term distribution target is 30 percent.

The Board of Management expects Group deliveries to increase moderately in full-year 2015 and, depending on economic conditions, Group sales revenue to increase by up to 4 percent year-on-year. In terms of the Group’s Operating profit, Volkswagen is forecasting an operating return on sales of between 5.5 percent and 6.5 percent in light of the challenging economic environment.

“Given the subdued growth prospects in regions outside China, there is no guarantee that 2015 will be a successful year – either for the industry or for the Volkswagen Group. Continuing political uncertainty, strong currency fluctuations and tough environments in markets such as Russia and Brazil present major challenges for the Volkswagen Group this year as well. In light of this, the scenarios underlying our forecast are based on conservative assumptions. Nevertheless, our goal is not only to increase our volumes, but also to lift sales revenue and earnings again”, said Chief Financial Officer Hans Dieter Pötsch, adding that “The continuing high liquidity and our robust financial position give us the necessary flexibility to successfully implement our Strategy 2018”.

Prospects for 2015:

The Volkswagen Group’s brands will press ahead with their product initiative in 2015, modernizing and expanding their offering by introducing new models. Our goal is to offer all customers the products and innovations they need, sustainably strengthening our competitive position in the process.

We expect that the Volkswagen Group will moderately increase its deliveries to customers year-on-year in 2015 in a persistently challenging market environment. The difficult market environment, fierce competition, 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, increasingly, from the modular toolkits.

Depending on economic conditions, we expect 2015 sales revenue for the Volkswagen Group and its business areas to increase by up to 4 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, we anticipate an operating return on sales of between 5.5 percent and 6.5 percent in 2015 in light of the challenging economic environment. The operating return on sales is expected to be in the 6.0 percent and 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, we are forecasting an Operating profit at the prior-year level. Disciplined cost and investment management and the continuous optimization of our processes remain integral elements of the Volkswagen Group’s Strategy 2018.

The Annual Media Conference and Investor Conference will be held in Berlin on March 12, 2015.