Volkswagen reports record profits for 2014

(February 27, 2015) The Volkswagen Group improved its earnings strength again in 2014 and continued along its qualitative growth path despite major economic challenges with sales revenue of EUR 202.5 billion ($226.8 billion) and an operating profit of EUR 12.7 billion ($14.22 billion), both record highs.

The operating margin improved to 6.3 percent compared to (5.9 percent last year, reaching the upper end of the forecast range of 5.5 percent to 6.5 percent. The Group's profit before tax increased to EUR 14.8 billion, while the return on sales before tax rose from 6.3 percent to 7.3 percent.

The equity-accounted profit of the Chinese joint ventures exceeded the high prior-year figure. The activities of the Chinese joint ventures have always been accounted for in the financial result using the equity method and are therefore not included in the Group's sales revenue and operating profit.

"We can look back on the past fiscal year with satisfaction and despite the difficult economic environment we achieved our goals for 2014. At the same time, our forward-looking efficiency program 'Future Tracks' has laid the groundwork that will enable us to continue our successful trajectory with all our strength", said Martin Winterkorn, chairman of the board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg.

Profit after tax came in at EUR 11.1 billion ($12.4 billion) compared to EUR 9.1 billion in 2013. Net cash flow in the Automotive Division increased by EUR 1.7 billion to EUR 6.1 billion thanks to the robust business model. Net liquidity in the Automotive Division rose to EUR 17.6 billion as of year-end 2014.

In light of the successful fiscal year, the Board of Management and the Supervisory Board will be proposing to the annual general meeting to increase the dividend by 20 percent to EUR 4.80 ($5.37) per ordinary share and EUR 4.86 ($5.44) per preferred share. This would result in a distribution ratio of 21.2 percent compared 20.6 percent last year. The medium-term distribution target is 30 percent.

The Board of Management expects Group deliveries to increase moderately in full-year 2015 and, depending on economic conditions, Group sales revenue to increase by up to 4 percent year-on-year. In terms of the Group's operating profit, Volkswagen is forecasting an operating return on sales of between 5.5 percent and 6.5 percent in light of the challenging economic environment.

"Given the subdued growth prospects in regions outside China, there is no guarantee that 2015 will be a successful year — either for the industry or for the Volkswagen Group. Continuing political uncertainty, strong currency fluctuations and tough environments in markets such as Russia and Brazil present major challenges for the Volkswagen Group this year as well. In light of this, the scenarios underlying our forecast are based on conservative assumptions. Nevertheless, our goal is not only to increase our volumes, but also to lift sales revenue and earnings again," said Chief Financial Officer Hans Dieter Pötsch, adding that "The continuing high liquidity and our robust financial position give us the necessary flexibility to successfully implement our Strategy 2018".