Volkswagen Group achieves its target in fiscal year 2013

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Volkswagen Group met and even beat its targets for 2013 despite the challenging competitive environment. “2013 was an extremely challenging year for European automakers in particular. We weren’t helped either by our home market or by exchange rates. Nevertheless, the Volkswagen Group put up a strong showing despite the difficult conditions”, said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, during the presentation of the company’s 2013 financial results in Berlin on Thursday. Winterkorn announced that the Group will now focus even more strongly on qualitative growth, with a particular emphasis on earnings quality, quality in development and people quality.

According to Winterkorn, the Group already holds the key to sustainably strengthening its earnings quality in its hands in the shape of its modular toolkits. Rolling out the toolkit strategy across the Group in the coming years would be a unique achievement in the automotive industry. “As volumes grow and new models are added, we will also see increasingly positive earnings effects”, he said. Over EUR 10 billion spent on research and development. With respect to quality in development, Winterkorn announced plans to rev up the innovation engine even higher. The Volkswagen Group spent over EUR 10 billion on research and development last year – more than any other manufacturer in the world. Enhancing people quality means in particular increasing knowledge transfer. Winterkorn believes that the Volkswagen Group’s greatest asset is the knowledge of its approximately 570,000 employees – and that this must be safeguarded and built on. At the same time, the Volkswagen Group will acquire new knowledge through its cooperation with around 280 universities and research institutes worldwide. “Sharing knowledge leads to new knowledge. This enables us to secure our technology leadership and business success in the future as well”, said Winterkorn.

CFO Hans Dieter Pötsch was also satisfied with 2013.“The Volkswagen Group continued its success story and further strengthened its market position thanks to its high profitability”, said Pötsch. “Given the ongoing challenges from the macroeconomic environment, we will continue to pursue our disciplined approach to cost and investment management and steadily improve existing processes. This provides a basis from which we can grow successfully in what remains a highly competitive environment.

The Volkswagen Group’s sales revenue increased by 2.2 percent to EUR 197.0 billion in fiscal year 2013 (previous year: EUR 192.7 billion). The Group’s operating profit rose slightly to a record EUR 11.7 billion (EUR 11.5 billion). Deliveries grew by 4.9 percent last year to more than 9.7 million vehicles (9.3 million). The Group’s delivery figures include all vehicles manufactured and sold by its Chinese joint ventures, which exceeded three million units for the first time last year.

By contrast, the Group’s sales revenue and operating profit do not include the Chinese joint ventures. Their businesses have always been accounted for in the financial result using the equity method and are therefore not included in consolidated operating profit.
The proportionate share of their operating profit rose to approximately EUR 4.3 billion (EUR 3.7 billion) in 2013. If this figure were included, the Group’s profit per vehicle delivered would have been significantly higher.

The financial result declined to EUR 0.8 billion (EUR 14.0 billion) last year. It should be noted that the 2012 figure was positively impacted by measurement effects in connection with the integration of Porsche (EUR 12.3 billion). Overall, the Volkswagen Group’s profit before tax was approximately EUR 12.4 billion last year (EUR 25.5 billion). Measurement effects in connection with the integration of Porsche also had a positive impact on profit before tax in 2012. The Group’s profit after tax was EUR 9.1 billion (EUR 21.9 billion).

In light of the company’s continued success, the Board of Management and the Supervisory Board will be proposing to the Annual General Meeting on May 13, 2014 to increase the dividend to EUR 4.00 (EUR 3.50) per ordinary share and EUR 4.06 (EUR 3.56) per preferred share.

The return on investment for the Automotive Division was 14.5 percent, well above the minimum required rate of return of 9 percent. The return on equity before tax in the Financial Services Division rose slightly to 14.3 percent (13.1 percent). “11”, said Pötsch.

Net liquidity in the Automotive Division remained sound at EUR 16.9 billion as of the end of December 2013 (year-end 2012: EUR 10.6 billion) thanks to the robust business model and net cash flow of EUR 4.4 billion. This gives the Group the necessary financial stability and flexibility to be able to maintain its profitable growth and to continue systematically
implementing its Strategy 2018.

The ratio of investments in property, plant and equipment (capex) to sales revenue rose slightly by 0.4 percentage points to 6.3 percent. Volkswagen therefore remains at a competitive level within its target corridor of 6 to 7 percent. Alongside its production facilities, Volkswagen invested mainly in the expansion and ecological focus of its model range, the use of electric drives and the modular toolkits.

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