The Volkswagen Group recorded a substantial impact on its business in the first three months of the current year as a result of the lockdown across countries to contain the spread of Covid-19 pandemic. Deliveries to customers decreased by 23 percent to two million vehicles compared to 2.6 million vehicles in the same period last year. Sales revenue fell by 8.3 percent from January to March to 55.1 (60.0) billion euros (Q1 2019 sales revenue: 60 billion euros).
Operating profit before special items decreased significantly by 81.4 percent to 900 million euros (Q1 2019 operating profit: 4.8 billion euros). The operating return on sales in the first quarter of 2020 was 1.6 percent. In addition to the fall in unit sales due to the drop in customer demand, turbulence in the commodity and capital markets led to negative effect on the fair value measurement of commodity hedges and the currency too.
Frank Witter, member of the Group Board of Management responsible for Finance and IT, said, “The global Covid-19 pandemic substantially impacted our business in the first quarter. We’ve taken numerous countermeasures to cut costs and ensure liquidity and we continue to be robustly positioned financially. The gradual restart, also of our factories outside of China, has begun. The health of our employees and suppliers remains the clear priority here. In Germany, the dealers have reopened since last week. We have thus taken initial steps together to get the business up and running again. The Volkswagen Group is steering through this unprecedented crisis with focus and determination.”
Operating profit expected for full year
The Volkswagen Group expects deliveries to customers in 2020 to be significantly below 2019 levels due to the impact of the pandemic. Challenges will also arise, particularly from the increasing intensity of competition, volatile commodity and foreign exchange markets and more stringent emissions-related requirements. Sales revenue of the Volkswagen Group in 2020 is expected to be significantly below the last year’s level as well. Overall, the Volkswagen Group expects operating profit for the full year 2020 to remain positive but severely below 2019 levels.
Despite countermeasures, the R&D ratio and the ratio of capex to sales revenue in the automotive division are expected to be above the previous year’s level due to lower demand and therefore falling sales revenues. In view of the lower customer demand, further payouts in relation to the diesel crisis and cash outflows from mergers & acquisitions, net cash flow for 2020 is expected to be below the 2019 levels too.
Robust liquidity in the Automotive Division
At the end of March 2020, net liquidity in the Automotive Division stood at 17.8 billion euros. At the end of December 2019, it was 21.3 billion euros. Net cash flow from the Automotive Division fell by 4.5 billion euros year-on-year. In the first three months, research and development costs were up by 2.3 percent year on year.
Business of various brands
In the first three months of the year, the Volkswagen Passenger Cars brand sold 765,000 (Q1 2019: 910,000) vehicles, a decline of 16 percent.
Unit sales by the Audi brand fell to 268,000 (Q1 2019: 305,000) vehicles year on year. The Chinese joint venture FAW-Volkswagen sold a further 97,000 (Q1 2019: 130,000) Audi vehicles. The key financial figures for the Audi brand include the Lamborghini and Ducati brands. In the period from January to March 2020, Lamborghini sold 2,253 (Q1 2019: 2,349) vehicles and Ducati sold 10,171 (Q1 2019:13,806) motorcycles.
The Skoda brand sold 237,000 vehicles in the reporting period, 13.7 percent fewer than in the previous year.
Unit sales by the SEAT brand stood at 140,000 vehicles in the first three months of 2020. This was 20.6 percent lower than a year earlier. This figure includes the A1 manufactured for Audi.
The Bentley brand recorded unit sales of 3,302 (Q1 2019: 2,584) vehicles in the reporting period. Porsche Automotive sold 56,000 vehicles worldwide between January to March, 1.3 percent fewer than a year before.
Unit sales by Volkswagen Commercial Vehicles fell to 99,000 (Q1 2019: 129,000) vehicles worldwide in the first three months of 2020.
Unit sales at Scania Vehicles and Services amounted to 19,000 (Q1 2019: 24,000) vehicles in the first quarter of 2020.
Man Commercial Vehicles sold 28,000 vehicles in the reporting period, down 17.2 percent year- on-year. Power Engineering generated sales revenue of 922 million euros in the first three months of 2020 (Q1 2019: 891 million euros).