Volkswagen Group returns to profitability with new record for sales revenue and operating result in 2016
The Volkswagen Group made progress in 2016 in overcoming its self-inflicted diesel crisis. Sales revenue in fiscal year 2016 rose by €4.0 billion (US$4.22 billion) to €217.3 billion (US$229.4 billion). At €7.1 billion (US$7.5 billion), the Group’s operating result, which dropped into the red in the previous year due to the diesel issue, was back in strongly positive territory. Before special items, the Group’s operating result reached a new record and at €14.6 billion (US$15.4 billion) was substantially higher than the prior-year figure (up 14%); the operating return on sales rose to 6.7% (6.0%).
In spite of further challenges resulting from the diesel issue and the persistently difficult conditions in vehicle markets such as Brazil and Russia, the Group delivered 10.3 million vehicles to customers worldwide in the past fiscal year—up 3.7% from 9.931 million in 2015. The Group therefore reached not only its targets for 2016 but also a new record, helped in particular by increases in Western and Central European markets and in the Asia-Pacific region.
Improvements in the mix and the vigorous financial services business were the main contributing factors to the increase in the Group’s sales revenue (up 1.9%), more than offsetting negative exchange rate effects and declining unit sales in individual regions.
Profit attributable to the Chinese joint ventures was down slightly in the reporting period, as expected. The business of the Chinese joint ventures is not included in the Group’s sales revenue and operating profit because it is accounted for in the financial result using the equity method.
In 2016, the Group’s earnings before and after tax, amounting to €7.3 billion (US$7.71 billion) and €5.4 billion (US$5.7 billion) respectively, were again in strongly positive territory. Net liquidity in the Automotive Division was up €2.7 billion (US$2.85) on the prior-year figure to €27.2 billion (US$28.7 billion) at year-end. The lion’s share (€6.4 billion / US$6.76 billion) of the special items arising from known risks in the reporting period was attributable to the diesel issue, especially for hedging of legal risks.
The Volkswagen Group expects the global economy to record slightly higher growth in 2017 than in the previous year. The Group anticipates the strongest rates of expansion in Asia’s emerging economies.
It expects trends in the passenger car markets in the individual regions to be mixed in 2017. Overall, growth in global demand for new vehicles will probably be slower than in the reporting period.
Volkswagen believes that deliveries to customers of the Volkswagen Group in 2017 will moderately exceed the prior-year volume amid persistently challenging market conditions. Challenges will arise particularly from the economic situation, intense competition in the market, volatile exchange rates and the consequences of the diesel issue.
The sales revenues of the Volkswagen Group and of the Passenger Cars and Commercial Vehicles Business Areas is expected to grow by up to 4% year-on-year in 2017. In terms of the Group’s operating result, Volkswagen anticipates an operating return on sales of between 6.0% and 7.0% in 2017.