Published on July 28th, 2016 | by Daniel Sherman Fernandez0
Volkswagen Group presents healthy results for the first half-year
The Volkswagen Group finished the first half of the current fiscal year in a much better position than anticipated. Operating profit before special items came to EUR 7.5 billion in the six-month period (previous year: EUR 7.0 billion). The Volkswagen Group therefore turned in a strong performance in the first half of 2016. However, negative special items in this period reduced the operating profit by EUR 2.2 (0.2) billion, mainly due to legal risks resulting from the diesel issue, for which additional provisions amounting to EUR 1.6 billion were recognized in the first six months of the year. As a consequence, the Group’s operating profit after special items decreased to EUR 5.3 billion. The operating return on sales in the Group declined to 4.9 (6.3) percent; before special items it was 7.0 (6.4) percent. At EUR 107.9 (108.8) billion, the Group’s sales revenue in the first six months fell slightly short of the prior-year figure.
Matthias Müller, Chairman of the Board of Management of the Volkswagen Group, commented on the interim results in Wolfsburg: “Particularly in light of the current special items, we can be satisfied with our results for the first half-year. The figures show that our operating business is sound. With our brands the Group is built on many strong pillars. Building on these foundations we will transform the Volkswagen Group with our ‘Together -Strategy 2025’ from a car maker into a world-leading provider of sustainable mobility.”
The Group’s operating profit does not include the proportionate operating profit of the Chinese joint ventures, which amounted to EUR 2.4 (2.7) billion in the reporting period. These companies are consolidated using the equity method and are therefore reflected solely in the financial result. Owing to the lower investment income and remeasurement effects, profit before tax in the first half-year declined to EUR 4.8 (7.7) billion. Profit after tax amounted to EUR 3.6 (5.7) billion.
“We produced a solid result in difficult conditions,” said Frank Witter, the Group’s Chief Financial Officer. “This shows that the Volkswagen Group has high earnings power. But it will require continued hard work to absorb the significant impact from the diesel issue.”
The results for the first half-year were based in more than just the prolonged positive growth for the Audi, Porsche and ŠKODA brands; they also resulted from a palpable improvement in the Volkswagen Passenger Car brand during the second quarter compared with the first three months of the year. This in turn is attributable to factors such as seasonally strong demand, a recovery of the car market in Europe and the revitalization of the fleet customer business. The efficiency program also had a positive effect here.