VW Group reports PBT of €12.5bn in first nine months, up 21%

Volkswagen Group’s sales revenue rose to € 174.6 billion (Rs 14.6 lakh crore ) following  € 170.1 (Rs 14.2 lakh crore) billion in the prior-year period. The Group has reported that in the first nine months, the Volkswagen Group delivered 8.1 million vehicles to customers throughout the world, thus allowing the company to increase deliveries worldwide by 4.2 percent over the prior-year period. The strong development in the first half of the year and during the summer months was able to compensate for September’s decline in deliveries, which was mainly caused by the WLTP transition.

Despite the switch to the new WLTP (Under conditions defined by EU law, the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) laboratory test is used to measure fuel consumption and CO2 emissions from passenger cars, as well as their pollutant emissions) test procedure, which resulted in the anticipated temporary third-quarter decline in unit sales particularly in Europe, the Group claims that its key figures for the first nine months are above the prior-year figures. The sales revenue and operating profits of the joint venture companies in China are not included in the figures for the Group. These companies are accounted for using the equity method and recorded a proportionate operating profit of  € 3.3 billion (Rs 27,668 crore) (previous year: 3.3 billion). The trade dispute between China and the United States is said to have dampened the business and consumer confidence, among other things, and brought about a significant market decline in the third quarter.

Dr Herbert Diess, chairman of the board of management of Volkswagen AG, explained: “The development in the first nine months of the current fiscal year is encouraging. We are still facing major challenges that we and the entire automotive sector have to overcome. As we are currently in the midst of a groundbreaking transformation, we have to continue picking up the pace.”

Brand-wise sales figures

Sales revenue at the Volkswagen Passenger Cars brand had reportedly risen in the first three quarters by 7.3 percent to € 62.5 billion (Rs 523,974 crore). Operating profit before special items amounted to € 2.3 billion (Rs 19,285 crore) (previously  € 2.5 billion (Rs 20,962 crore)). In addition to the changeover to the WLTP, higher distribution expenses resulting from factors such as the scrapping premium, exchange rate effects and upfront expenditures for new products, especially in connection with the implementation of the electric mobility campaign, weighed on the operating profit. However, higher vehicle sales and improved product costs is said to have had a positive effect. The diesel issue resulted in special items of € 1.6 billion (Rs 13,417 crore).

Sales revenue at the Audi brand increased to € 44.3 billion (Rs 371,479 crore) (previously € 44 billion (Rs 368,963 crore)) from January to the end of September. Operating profit before special items amounted to € 3.7 billion (Rs 31,022 crore) (previously € 3.9 billion (Rs 32,711 crore)). Improvements in the mix and positive exchange rate effects were unable to compensate for lower vehicle sales and higher sales costs, both of which also reflect the impact of the WLTP. The diesel issue gave rise to special items of  € 0.8 billion (Rs 6,709 crore). The financial key performance indicators for the Audi brand include the Lamborghini and Ducati brands.

At € 12.6 billion (Rs 105,678 crore), the Group reveals that the sales revenue at SKODA rose year-on-year by 2.1 percent in the reporting period. Operating profit decreased by 10.2 percent to € 1.1 billion (Rs 9,225 crore), due in particular to negative exchange rate and mix effects, in addition to higher upfront expenditures for new products.

Sales revenue at the SEAT brand amounted to € 7.7 billion (Rs 64,589 crore) in the first nine months, representing a 6.7 percent boost over the prior-year figure. The brand has reported an increase in the operating profit by 54.4 percent to € 237 million (Rs 1,988 crore), with the effects of upfront expenditures for new products being more than compensated for by positive volume and mix effects.

The Bentley brand’s sales revenue slipped to € 1.1 billion (Rs 9,225 crore) (previously € 1.3 billion (Rs 10,905 crore)). Operating result amounted to € 137 million (Rs 1,149 crore) (previously € 31 million (Rs 260 crore)), impacted mainly by exchange rate effects and delays in the start-up of the new Continental GT.

Porsche Automotive’s sales revenue rose to € 17.5 billion (Rs 146,806 crore)(previously  € 15.7 billion (Rs 131,706 crore)) in the first nine months. The operating profit improved by 10.6 percent to € 3.2 billion (Rs 26,845 crore), due in particular to positive mix effects and higher volumes.

Sales revenue for Volkswagen Commercial Vehicles amounted to € 8.6 billion (Rs 72,147 crore), representing a 3.9 percent decline as compared to the previous year figure. Despite positive mix effects and material cost optimisation, an unfavourable exchange rate trend and challenges presented by the WLTP played a major role in the 10 percent fall in operating profit to € 628 million (Rs 5,266 crore).

Sales revenue at the Scania brand stood at € 9.6 billion (Rs 80,512 crore)(previously  € 9.3 billion (Rs 78,008 crore)) from January to the end of September. Scania generated an operating profit of EURO 991 million (Rs 8,311 crore) (previously € 947 million (Rs 7,942 crore)), mainly on the back of higher volumes, a favourable exchange rate trend and an improved financial services business. The Group reveals that cost increases had a negative effect.

MAN Commercial Vehicle’s sales revenue improved to EURO 8.6 billion (Rs 72,137 crore) (previously € 8 billion (Rs 67,104 crore)) in the first three quarters. Operating result fell to € 222 million (Rs 1,862 crore)(previously € 269 million (Rs 2,257 crore)), as higher volumes were unable to compensate for the expenses incurred in connection with the restructuring of activities in India.

MAN Power Engineering recorded sales revenue of € 2.5 billion (Rs 20,982 crore) (previously € 2.4 billion (Rs 20,146 crore)) in the reporting period. Operating result amounted to € 142 million (Rs 1,192 crore)(previously € 107 million (Rs 898 crore)).

The Group expects that full-year deliveries in 2018 will continue to moderately surpass the previous year’s figure. The sales revenues of the Volkswagen Group and its business areas are intended to grow by as much as 5 percent year-on-year. In terms of the operating profit before special items for the Group and the Passenger Cars Business Area, they forecast an operating return on sales in the range of 6.5 – 7.5 percent in 2018. Including special items, the operating return on sales is expected to fall moderately short of the expected range for both the Group and the Passenger Cars Business Area.