Volkswagen Group's operating profit soars 22% in 2019

by Autocar Pro News Desk , 28 Feb 2020

The Volkswagen Group has released fiscal year 2019 numbers. Sales revenue increased by 16.8 billion euros to 252.6 billion euros and operating profit before special items rose to 19.3 (17.1) billion euros. At 7.6 (7.3) percent, the operating return on sales before special items slightly exceeded the forecasted range for 2019. Operating profit also improved to 17.0 (13.9) billion euros, which constitutes robust year-year growth of 22 percent.

In the Automotive Division, net cash flow increased markedly to 10.8 (-0.3) billion euros, with net liquidity reaching 21.3 (19.4) billion euros.

“In 2019, our attractive product portfolio convinced many customers, allowing us to expand our position in an overall declining market,” said Frank Witter, member of the Group Board of Management responsible for Finance and IT. “We increased sales revenue and operating profit of the Group as well as net cash flow and net liquidity in the Automotive Division, which means that financially we are still very robust. We expect a continuously challenging market environment this year. Consequently, achieving our ambitious targets will require a major effort from the entire company.”

One of the drivers of the Volkswagen Group’s operating profit in 2019 was the slight increase in deliveries to customers, which rose to 10.97 million vehicles (+1.3 percent). Growth was recorded above all in Europe and South America, while deliveries to customers in North America and the Asia-Pacific region slightly declined due to overall market trends. The Group’s market share rose in almost all regions. Despite challenges in the Chinese market, the share of operating profit attributable to the Chinese joint ventures remained close to the previous year’s level at EUR 4.4 (4.6) billion.

2020 outlook
Volkswagen says expects that deliveries to the Volkswagen Group customers in 2020 will be in line with 2019 amid a continued challenging market environment.

Challenges will arise particularly from the economic situation, the intensifying competition, volatile commodity and foreign exchange markets and more stringent emissions-related requirements. It expects Group sales revenue to grow by up to 4 percent in 2020 and the sales revenue of the Passenger Cars Business Area to be moderately higher than the prior-year figure.

In terms of the operating profit for the Group and the Passenger Cars Business Area, it forecasts an operating return on sales in the range of 6.5–7.5 percent in 2020. For the Commercial Vehicles Business Area, it anticipates an operating return on sales of 4.0–5.0 percent amid a moderate decrease in sales revenue.

All in all, a very good showing in what was a difficult year worldwide. Volkswagen Group has cautioned that "the expectations presented in the outlook are subject to assessment uncertainties due to, among other factors, continuing geopolitical tensions and conflicts as well as epidemics spreading across countries and regions, as we are currently seeing in the case of the corona virus, whose effects must be closely monitored."

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