Volkswagen reports record unit sales, sales revenue and profit

Sales revenue grew by 4.5 percent to €113.8 billion on the back of a 1.3 percent rise in unit sales to 6.3 million vehicles. At €6.3 billion, operating profit was up by 3.0 percent year-on-year. Profit after tax amounted to €4.7 billion (+13.7 percent).

With the Automotive Division recording its first-ever double-digit return on investment of 10.9 percent - following 9.5 percent in the previous year - Volkswagen again earned its cost of capital in 2008 and therefore also exceeded its own minimum required rate of return of 9 percent. "For the first time in the history of the Volkswagen Group, we reached a double-digit return on investment. This is an excellent achievement for our Company and impressively underscores the fact that we have systematically increased our operating earnings power, while maintaining our disciplined approach to investments", said CFO Hans Dieter Pötsch.

Despite the considerable challenges posed by the significant deterioration in the economic environment, the Group improved its operating profit from €6.2 billion in the previous year to €6.3 billion in 2008. This was driven primarily by the €1 billion improvement in product costs.

The Board of Management and Supervisory Board will propose to the Annual General Meeting to increase the dividend to €1.93 (€1.80) per ordinary share and €1.99 (€1.86) per preferred share.

In 2008, the Volkswagen Group invested approximately €6.8 billion in expanding its product range and in its new production facilities in Russia and India. Its activities focused on the further development of the BlueMotion range and the development of low-consumption technologies for the environmentally friendly car of the future.

[B]Markets[/B]

In the past year, the Group launched 52 new models, successors and product enhancements. In a global automotive market that has contracted by 6 percent, Europe's largest automobile manufacturer increased its deliveries and gained additional share in key markets. The strongest-growing regions were South America, Asia-Pacific and China, where over a million vehicles (+12.5 percent) were delivered for the first time. In Germany, the Group delivered 1.06 million vehicles (+0.5 percent) and thus outperformed the market as a whole (-1.8 percent). At the same time, its market share rose by 0.9 percentage points to 33.6 percent. Volkswagen's third-largest market, Brazil, contributed 633,300 deliveries (+8.9 percent) to the strong Group total. With sales of 314,500 (-4.5 percent), Volkswagen of America held its own despite the downturn in the overall market (-18.0 percent).

[B]Brands and business fields[/B]

In addition to the launch of new models such as the Passat CC and Scirocco, the focus of activities for the Volkswagen Passenger Cars brand was on the new Golf. In the past fiscal year, operating profit increased by 40 percent to €2.7 billion (€1.9 billion). The impact of exchange rates was more than offset by lower fixed costs and improved product costs.

The premium brand [I]Audi[/I] delivered over a million vehicles for the first time in the company's history. This was due to the new A4, among other models. Operating profit rose to €2.8 billion (€2.7 billion).

[I]Škoda's[/I] most important new model was the Superb. The Group's Czech company recorded an operating profit of €565 million (€712 million), down by €147 million year-on-year due to the continued unfavorable exchange rate of the Czech krone. The focus at [I]SEAT[/I] was on the new Ibiza, which was successfully launched. Despite the systematic implementation of its performance enhancement program, SEAT recorded a loss of €78 million (profit of €8 million) due to the exceptionally difficult conditions in its core sales market, Spain.

[I]Bentley[/I] recorded a profit of €10 million (€155 million) amid a substantial decline in unit sales for premium vehicles.

[B]Outlook[/B]

The Board of Management believes that the business outlook for 2009 remains highly uncertain and entails considerable risks. The highly volatile market situation does not currently allow any reliable predictions to be made about the further development of this fiscal year. "An extremely difficult year lies ahead of us", stressed Winterkorn. At the same time, however, he is confident that Europe's largest automobile manufacturer will emerge stronger from the current phase.

"The strengths of our multibrand Group are now paying off, and that's why I believe that Volkswagen will take pole position in the period after the crisis when the markets pick up again", said Winterkorn.

In 2009, the Group will launch some 60 new models, product enhancements and successors in the market. The Group will bundle all its strengths and financial resources to continue to add innovative and environmentally friendly vehicles to its product range. The Group already offers 132 models with emissions below 140g CO2/km.

The Group's sales revenue in 2009 will be below that of the previous year due to the declining unit sales situation. Rising refinancing costs and a worsening of the country mix will serve as an additional drag on earnings. In such a situation, it will not be possible to reach the high level of earnings achieved in previous years.

Credits: JRC