Volkswagen starts fiscal year 2011 with record first-quarter results

The Volkswagen Group leveraged its prior-year momentum and maintained its growth rate in the first quarter of 2011.“Business developments in the first quarter demonstrate the Volkswagen Group’s strength and robustness”, said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, on Wednesday at the presentation of the interim report for the first quarter of fiscal year 2011.

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Sales revenue climbed by 30.8 percent to €37.5 billion (Q1 2010: €28.6billion). At 1.99 million, vehicle deliveries by Europe’s largest automotive group were up 14.0 percent in the period between January and March,exceeding the prior-year quarter’s strong figures. The Group’s share of the global passenger car market rose to 12.0 percent in the reporting period(11.5 percent). Operating profit   climbed to €2.9 billion (€0.8 billion). The operating return on sales rose from 3.0 percent to 7.8 percent year-on-year.The consolidated operating profit does not include the €557 million share of the operating result accounted for by the Chinese joint ventures (€303 million). These companies are included using the equity method and are therefore reflected in the financial result. The Wolfsburg-based Group’s profit before tax amounted to €2.2 billion (€0.7 billion).The result after tax for the first quarter of the year increased to €1.7 billion (€0.5billion).

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CFO Hans Dieter Pötsch was also satisfied with developments in the first three months. “The Volkswagen Group has got off to a good start”, said Pötsch, adding: “Our sound finances and continuous improvements in profitability are the basis for the Volkswagen  Group’s successful future”.The positive overall development on the global automotive markets, and in particular the sustained high demand in China, India, Central and Eastern Europe, and North and South America, was the main earnings driver. In addition to the higher volumes, lower product costs contributed to ongoing profitable growth.

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In the first quarter of 2011, net liquidity in the Automotive Division increased by one billion euros as against year-end 2010, to €19.6 billion.This includes the cash outflows from the acquisition of the trading activities of Porsche Holding Salzburg (PHS) and the investment in SGL Carbon SE, Wiesbaden, totaling €3.5 billion. “Our net liquidity in the Automotive Division remains at a high level”, said Pötsch. “This substantial basis is not an end in itself; rather, it provides us with the financial flexibility we need for our investments and to implement our Strategy 2018”,he added. The Volkswagen Group has set itself the goal of becoming the global economic and environmental leader in the automobile sector by the year 2018.

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The Volkswagen Group maintained its strict investment discipline with a ratio of investment in property, plant and equipment to sales revenue of 2.percent in the Automotive Division. This figure is expected to remain within the target corridor of up to around 6 percent of sales revenue for the full year. “We are continuing to make targeted, ongoing investments in new products, new technologies and new locations, always ensuring that our upfront expenditures are focused on safeguarding the future of our Company and generating adequate returns”, he continued. All brands and business fields within the Group recorded improvements in the first quarter. Overall, unit sales by the Volkswagen Group in the period from January to March rose by 19.3 percent year-on-year, to 2.0 million vehicles (1.7 million).

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Global sales by the Volkswagen Passenger Cars brand in January to March rose to 1.1 million vehicles (0.9 million). Demand for the Polo, Tiguan, Touareg,Jetta, Passat Variant, Passat CC and Sharan models increased. The Volkswagen Passenger Cars brand’s operating profit more than doubled in comparison to the first quarter of 2010, rising from €416 million to €1.1 billion. Worldwide sales by the premium brand Audi increased by 18.1 percent in the first quarter to 374,000 vehicles (316,000 vehicles). Operating profit grew from €478 million to €1.1 billion. The Audi Q5 and Audi Q7 models recorded the highest growth rates. Demand for the new Audi A1, Audi A7 Sportback and Audi A8 models was also encouraging.

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Unit sales by the Škoda brand increased to 181,000 in the period from January to March (142,000 vehicles). First-quarter operating profit rose to €187 million (€100 million). All Škoda’s model series contributed to this success. SEAT sold 93,000 vehicles worldwide (91,000 vehicles). The loss generated by the brand amounted to €12 million, after a loss of €110 million in the prior-year period. Higher volumes, reduced sales support measures and optimized marketing costs contributed to this. Bentley benefited from improved conditions in the luxury segment. The brand’s operating loss narrowed by €11 million compared with the prior-year period, to €25 million. Bentley was negatively impacted by upfront expenditures for new products and exchange rate effects.

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Volkswagen Commercial Vehicles sold 108,000 light commercial vehicles worldwide in the first quarter of 2011. This corresponds to an increase of 47.4 percent compared with the prior-year period. The brand generated a first-quarter operating profit of €92 million thanks to the higher volume, following a loss of €16 million in the prior-year period.The truck manufacturer Scania continued its positive development in the period from January to March 2011. At €376 million, operating profit was €162 million higher than in the previous year thanks to increased demand for heavy trucks and buses

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The Volkswagen Financial Services Division turned in yet another successful quarter. The first-quarter operating profit amounted to €287 million, up €119 million on the previous year.The Group is confident about 2011. “Volkswagen is continuing to power ahead”, said Winterkorn, adding: “Thanks to our expertise in technology and design, we have a diverse, attractive and environmentally friendly range of products that meets customers’ desires and needs”.

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Overall, global demand for passenger cars is expected to exceed the level for 2010. In some Western European countries, rising public debt and the end of subsidy programs will have a negative impact on demand for new vehicles.By contrast, an increase in new vehicle registrations can be expected in Central and Eastern Europe. The Volkswagen Group expects the positive trend in the strategically important markets of China and India to continue, and that demand will also rise further in the markets of North and South
America.

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 “In 2011, the Volkswagen Group's nine brands will once again introduce a large number of fascinating new models to the market, thus further expanding our strong position in the global markets”, said Winterkorn. In addition, the modular toolkit system, which the Volkswagen Group is continually optimizing, will have an increasingly positive effect on the Group’s cost structure. However, the continuing volatility in interest and exchange rate trends and commodities prices will weaken the positive volume effect.“Volkswagen shifted into the fast lane in 2010 and that’s exactly where we intend to stay this year”, Winterkorn emphasized. The Volkswagen Group expects sales revenue and operating profit in 2011 to be higher than the previous year.