VW Cars records revenue growth of 3.4% in H1, eyes 5% growth by end-2019

by Mayank Dhingra 30 Jul 2019

Volkswagen Passenger Cars has announced its global financial results for the January to June 2019 period. The German carmaker says it was able to increase its sales revenue and operating profit in the first six months of the current calendar year despite a slight fall in deliveries. Driven by the improved product mix, the sales revenue of the Volkswagen brand grew by 3.4 percent to Euro 44.1 billion (Rs 338,428 crore). In the first half of the year, the brand was able to gain market shares.

However, its deliveries fell by 3.9 percent to 2,998,200 vehicles as a result of the overall weak market conditions. The Volkswagen brand is continuing its product offensive this year, especially adding SUV models such as the new T-Cross to its portfolio. While demand for these model variants continues to be strong in many regions across the segments concerned, the T-Cross crossover is also set for an India launch sometime in 2020-21.

VW Passenger Car’s operating profit before special items in the H1 of 2019 stood at Euro 2.3 billion (Rs 17,650 crore), 7.4 percent higher than in the first half of 2018. The operating return on sales increased to 5.2 percent. In the Q2, there were no further special items resulting from litigation risks, after about Euro 400 million (Rs 3,070 crore) had been booked in the first quarter.

“In a difficult market environment, the Volkswagen brand developed very satisfactorily in the first half of the year. We were able to record improvements in operating profit and return on sales compared with the very good figures for the first half of 2018. The operating profit was supported by factors including the continuing product offensive, the optimisation of fixed costs and progress with the turnaround in the regions. We intend to use this positive momentum to secure our return on sales targets. We will further strengthen our competitive position through targeted investments in e-mobility and digitalisation,” said, Board Member for Finance Dr. Arno Antlitz.

The consistent efforts made to improve costs, productivity and efficiency continue to have a positive effect. The continuing implementation of measures under the pact for the future is playing a key role in improving the earnings situation. In the first six months, the fixed costs of the brand were slightly improved compared with the previous year.

Revenue and return target confirmed
In the ongoing financial year, VW brand expects that the operating return on sales will be within the target corridor of four to five percent. The brand does not expect the second stage of the changeover to the WLTP test cycle to have a significant financial impact in the current financial year. As regards sales revenue, the Volkswagen brand continues to expect an increase of up to five percent.

Volkswagen Passenger Cars operates in more than 150 markets worldwide and produces vehicles at more than 50 locations in 14 countries. In 2018, Volkswagen produced around 6.2 million vehicles, including bestsellers such as the Golf, Tiguan, Jetta and Passat. Volkswagen has a current workforce of 195,878 employees around the globe.