(February 27, 2017) WOLFSBURG, Germany — The Volkswagen Group appears to be making progress with overcoming the diesel engine crisis. In 2016, the company’s operating business presented a very robust performance even though earnings were impacted once again by negative special items.

Before special items, the Group exceeded its original forecasts. Sales revenue in fiscal year 2016 rose by EUR 4.0 billion ($4.23 billion) to EUR 217.3 billion ($230 billion). At EUR 7.1 billion, the group’s operating result, which had slipped into the red in the previous year due to the diesel issue, was back in strongly positive territory.

Before special items, the Group’s operating result reached a new record and at EUR 14.6 billion was substantially higher than the prior-year figure (up 14 percent); the operating return on sales rose to 6.7 (6.0) percent.

Furthermore, the realignment of the Group that was initiated already produces tangible results. “While the past fiscal year posed major challenges for us, despite the crisis the group’s operating business gave its best-ever performance,” CEO Matthias Müller said in Wolfsburg. “As the figures show, Volkswagen is very solidly positioned in both operational and financial terms. This makes us optimistic about the future.”

He went on, “The Group’s new structure with more decentralized responsibility will strengthen our brands and regions and increase our proximity to customers. We will become faster and more focused and efficient. This will enable us to make much more focused use of the strengths of our multibrand group and its potential for synergies.”

In spite of further challenges resulting from the diesel issue and the persistently difficult conditions in vehicle markets such as Brazil and Russia, the group delivered 10.3 million vehicles to customers worldwide in the past fiscal year. The group therefore reached not only its targets for 2016 but also a new record, helped in particular by increases in Western and Central European markets and in the Asia-Pacific region.

Improvements in the mix and the vigorous financial services business were the main contributing factors to the increase in the Group’s sales revenue (up 1.9 percent), more than offsetting negative exchange rate effects and declining unit sales in individual regions. Profit attributable to the Chinese joint ventures was down slightly in the reporting period, as expected. The business of the Chinese joint ventures is not included in the Group’s sales revenue and operating profit because it is accounted for in the financial result using the equity method.

In 2016, the group’s earnings before and after tax, amounting to EUR 7.3 billion and EUR 5.4 billion respectively, were again in strongly positive territory. And the financial situation remains robust. Amounting to EUR 27.2 billion at year-end, net liquidity in the Automotive Division was up EUR 2.7 billion on the prior-year figure. The lion’s share (EUR 6.4 billion) of the special items arising from known risks in the reporting period was attributable to the diesel issue, especially for hedging of legal risks.

“In spite of the charges and the challenges arising from the diesel crisis, we can be satisfied on the whole with the group’s business development and economic position,” said Chief Financial Officer Frank Witter, commenting on the annual financial statements.

“I am confident that the Volkswagen Group will overcome the present challenges. We must use great discipline to achieve the set targets in all divisions, in order to return to the path of success in the coming years.”