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VW Group books record sales and profit despite ‘diesel issue’ costs

A record delivery of 10.7m vehicles lifted VW Group sales revenue 6.2 per cent year on year to €230.7bn though “special items attributable to the diesel issue” again reduced operating profit, which nevertheless rose €6.7bn to €13.8bn. The group expects to “moderately exceed” its latest record delivery figures in 2018.

“Looking ahead, we – like the entire industry – are facing major challenges and radical change,” said CEO Matthias Muller.

“The excellent financial result provides a strong basis for this and gives us every reason to be confident.”

The increase in sales revenue was mainly due to strong unit sales as well as the healthy performance of the Financial Services Division; exchange rates had a negative effect.

We – like the entire industry – are facing major challenges and radical change

Operating profit before special items of €17bn (€14.6bn) and the operating return on sales before special items increased to 7.4 per cent (6.7 per cent). The increase was mainly the result of volume-, mix- and margin-related factors as well as improvements in product costs. Special items contained in operating profit totalled €-3.2 (-7.5)bn for 2017 as a whole.

The special items related exclusively to charges incurred in the passenger cars business due to the diesel issue, driven specifically by higher expenses for buy back and retrofit programmes for 2.0 and 3.0 l TDI vehicles in North America as well as higher legal risks.

Group operating profit after special items was €13.8bn; operating return on sales rose to six per cent (3.3 per cent).

The share of operating profit attributable to the Chinese joint ventures (€4.7bn) was down slightly.

“The financial statements show our operating business is strong and the group’s financial situation robust,” said CFO Frank Witter.

“All the same, we must not relax our efforts because huge challenges lie ahead. Shaping the group’s transformation will not only require a great deal of time and energy; it will also be very expensive. This is why we must continue to keep our expenditure under tight control and advance the necessary innovations at the same time.”

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