Volkswagen Results Benefit From Strong Sales, Cost Cutting
24 February 2018 - 4:35AM
Dow Jones News
By William Boston
BERLIN -- Volkswagen AG, the world's biggest car maker by sales,
said Friday that net income more than doubled last year on the back
of strong sales of its major marques and the effect of cost-cutting
at its flagship VW brand.
The preliminary report lacked detail, but it suggested that
earnings in the final three months of the year significantly missed
analysts' targets. And Volkswagen's unambitious outlook for this
year caused some analysts to raise concerns about the company's
commitment to cutting costs and boosting profits.
"We are not impressed," said Arndt Ellinghorst, auto analyst at
London-based brokerage Evercore ISI.
The costs of resolving the 2015 diesel emissions-cheating
scandal continue to weigh on the company's earnings, but Volkswagen
expects strong profit margins and an increase in revenue of as much
as 5% this year.
In a preliminary earnings statement published after a meeting of
the supervisory board in Wolfsburg, Germany, Volkswagen said net
income was EUR11.4 billion ($14.06 billion) last year, up from
EUR5.14 billion the year before.
Revenue rose 6.2%, to EUR230.7 billion, as unit sales increased
4.3%, to 10.7 million vehicles.
Volkswagen said it would propose an increase in its dividend, to
EUR3.90 ($4.81) on ordinary shares and EUR3.96 on preferred shares
from EUR2 and EUR2.06, respectively.
Looking ahead to 2018, Chief Executive Matthias Müller sounded a
note of caution as the company shoulders huge investments in new
technology for electric vehicles and self-driving cars amid a
slowing global economy and mixed automotive markets.
"We -- like the entire industry -- are facing major challenges
and radical change," he said.
Volkswagen predicted it would achieve a return on operating
revenue in a range of 6.5% to 7.5% in 2018, which some analysts
said wasn't ambitious and could suggest the company is slowing down
cost-cutting efforts.
The diesel scandal continues to be a drag on the company's
financial resources. Frank Witter, the company's finance chief,
said Volkswagen had to digest cash outflows of more than EUR10
billion "due to the diesel issue, primarily for vehicle recalls and
legal risks."
Volkswagen took diesel-related charges against earnings of
EUR3.2 billion last year, down from EUR7.5 billion the previous
year.
In China, Volkswagen's biggest single market, the company now is
facing increased competition and higher costs to meet tough
emissions regulation. Volkswagen doesn't consolidate its China
revenue and profit, but said pretax profit from its China joint
ventures was EUR4.7 billion last year, "down slightly" from the
year before.
The company didn't provide details on the earnings at its
brands, which include Porsche, Audi, Skoda, Seat, Lamborghini and
Bentley. A detailed earnings report will be published in March.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
February 23, 2018 12:20 ET (17:20 GMT)
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