Porsche stable: Volkswagen share goes out of trading much more firmly: VW core brand makes it operationally into the black – Corona pushes VW boss’s salary | message

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Before interest, taxes and special items from the diesel affair, the group reported a profit of 454 million euros for the brand on Tuesday. For a long time it was unclear whether the Wolfsburg-based company would still be able to get the momentum back into the black. After the first half of the year and the slump in the Corona crisis, the brand with the VW logo had amassed an operating loss of 1.5 billion euros. The management around brand boss Ralf Brandstätter had acted fiercely to make the turnaround. The core brand will present details on Wednesday.In a year-on-year comparison, however, it becomes clear how business has suffered from Corona. The brand’s sales fell by almost a fifth to 71.1 billion euros. Adjusted operating profit was 454 million euros, almost 90 percent below the previous year’s figure of 3.8 billion euros. The corresponding return on sales fell from 4.3 to 0.6 percent.

At AUDI, the crisis also made itself felt with a decline in sales of 10 percent to 50 billion euros and an operating profit decline of 40 percent to 2.7 billion euros. Porsche came off well, where sales in the auto business remained stable at 26.1 billion euros and the operating result fell by just under 5 percent to 4.0 billion euros. Among the group brands, the light VW commercial vehicles, Seat and the truck manufacturer MAN made an operating loss.

Volkswagen confirms outlook for 2021

As planned, Volkswagen expects significantly better business this year and continues to focus on cost reductions. According to the annual report, sales in the Group and in the passenger car business are expected to be significantly higher than in the previous year in 2021. The operating return should be at the upper end of the range 5.0 to 6.5 percent. In the following years, the target corridor of 7 to 8 percent should be achieved again as quickly as possible.

Cost reductions should also contribute to this. According to VW, fixed costs are to fall by around 2 billion euros or 5 percent by 2023 compared to 2020. A reduction of 7 percent will be aimed for in material costs by then. In addition, greater synergies are to be leveraged across the group.

“The good performance in the crisis year 2020 gives us tailwind to accelerate our transformation,” said VW CEO Herbert Diess, according to the announcement.

Above all, the group now wants to further develop its platform strategy. In the future, vehicles and services from all Group brands are to be based on largely uniform technical principles. In addition to hardware and software, the strategy also includes the battery and charging as well as mobility services.

Corona situation depresses VW boss’s salary – but still 6.1 million

The lower profit of Volkswagen also reduced the salary of CEO Herbert Diess somewhat in 2020. The top manager received – without taking pension entitlements into account – according to the remuneration report around 6.1 million euros, a good 900,000 euros less than for the previous year. This was mainly due to a significantly lower variable component, which includes the development of the business result, which was recently clouded by the Corona crisis. This was more than 2.2 million euros lower.

However, part of the decline was offset by another bonus for VW board members, according to the figures presented on Tuesday. This in turn is based on the three years before (2017 to 2019) and brought Diess almost 1.8 million euros.

The values ​​are difficult to compare directly. Because last time the total amount also included a payment that came from a share package that was initially put on hold after the start of the diesel crisis. Something like that does not appear again now.

The salaries of VW board members consist of a fixed base salary plus fringe benefits and two variable components: a bonus for the current year and a bonus based on a range of three previous financial years. For the latter, the payout is staggered over several levels and discounts. Diess’ pension entitlements in 2020 amounted to just under 1.6 million euros.

Demand should fix it: VW continues to hold on to the combustion engine

2024, 2025, 2026. At Volkswagen, one important course of action is to follow the next one in the medium term. At times, however, it seems to some observers that Germany’s largest industrial group is first taking many steps forward – and then back again in some cases.

On the one hand, there is the launch of the new flagship and “Tesla-Fighter” Artemis in three years. In addition, the use of a standard battery from our own factories, plus the targeted network expansion to 18,000 fast charging points in four years. Not counting a number of projects to ramp up e-mobility.

Then, on the other hand, the year 2026 will come – and with it the possible start of a further generation of combustion models. At least according to current planning. The best-selling European car group wants to supplement the classic series with more hybrid variants. However, VW still does not name a date for saying goodbye to gasoline and diesel engines.

CEO Herbert Diess relies on control via supply and demand. “In some regions, combustion engines will be sold for longer than in other regions,” he said on Tuesday regarding the 2020 annual balance sheet. After his introduction, the change will come through the market and customers. Although VW also has to comply with stricter EU rules for climate protection, which are building up a lot of pressure: in 2020 the group still missed the permissible value, albeit just under.

The path Wolfsburg has in mind is: slow phasing out of the old drives instead of fixed dates. “Over the entire period we will optimize our business with combustion engines through fewer models, a better price mix and lower fixed costs,” said Diess.

In spite of all the recognition for the electrical strategy that was pushed under his direction with billions over billions in investments, critics still have a stale aftertaste. Why is the group, responsible for one percent of global CO2 emissions, not finally committed to a specific goal for the end of the combustion engine?

The VW boss points out, for example, that profitable SUVs, sports cars and sedans are still necessary for the time being – precisely in order to finance the transition to the purely electric world. In addition, modern combustion engines are many times more efficient and less harmful to the environment than their predecessors from the times of the diesel crisis.

Still, when it comes to fossil phasing out, others are far more determined. Long-standing US rivals General Motors, Volvo, Jaguar or, for Europe, the new partner Ford Motor, to which VW is making its e-platform available, named corresponding goals. Entire countries are also swinging around. Norway does not want to allow classic combustion sales from 2025. Great Britain, Sweden, Denmark, the Netherlands and Belgium from 2030, France from 2040. Even the huge emerging country India wants to get out in the medium term.

There is no official talk of this in Germany, the automotive state – much to the displeasure of climate protectors. Without the consequences of the corona crisis, the 2020 climate target would have been broken, the Federal Environment Agency estimated on Tuesday. Marion Tiemann from Greenpeace says: “Tomorrow’s competitors are US digital corporations and Chinese e-car manufacturers. They are in the starting blocks without the ballast and risk of climate-damaging technology from the past century.”

Skeptics of fixed exit dates, on the other hand, argue that the change cannot be pushed through against customers. As long as e-cars are comparatively expensive, such appeals could be exhausted in symbolic politics.

Diess gives another reason: “The change to e-mobility takes place at different speeds around the world, depending on local legislation and the availability of CO2-free primary energy.” For example, where electricity is mainly produced from coal or oil, he does not see much point in switching to pure electric drives.

Staged market penetration is therefore better than the big regulatory bang. In Europe, for example, Diess assumes that up to 60 percent of all VW sales will be made from electric cars by 2030, and then perhaps half worldwide.

The luxury class subsidiary Audi announced an intermediate step. Boss Markus Duesmann said that from now on no more internal combustion engines would be developed. The existing ones would be adapted to the stricter rules. And other pure electric models are also coming from Ingolstadt.

The group also wants to drive the issue with its own battery cell plants, and a network of six locations for self-sufficiency is to be created by 2030. At the beginning of the week there was even a rather rare partial praise from the Greens. “This is how jobs are preserved,” said Bundestag parliamentary group vice-president Oliver Krischer – “not about the evocation of nonsensical synthetic fuels for the internal combustion engine, as one hears from the Ministry of Transport”.

Analysts such as NordLB auto expert Frank Schwope also think the “dynamic” e-offensive is good. “However, the political reality in many countries has long since gone so far or further. It is possible that by 2030 it will no longer be possible to sell new combustion engines in Europe.”

All in all, Diess’s price is caught on the stock exchange. VW’s preferred share, which is listed in the DAX, rose significantly at the top of the index on Tuesday by 6.71 percent to EUR 207.85. NordLB analyst Frank Schwope wrote that the strong results would primarily come from the group subsidiaries Porsche and Audi, as well as from the financial services business. The topic of electromobility is meanwhile driving the management forward dynamically. Evercore analyst Chris McNally even sees a duopoly between VW and the US electrical pioneer Tesla in electric drives. VW’s stated target for this year of delivering one million electrified vehicles is 20 percent more demanding than the consensus analysts assume.

The preferred share has been running well for months, and the group’s market value has now reached almost 119 billion euros. At the end of October the share was still worth around 125 euros – since then it has gained almost 70 percent in value. More and more investors are rewarding Diess’s move in the direction of electric cars and a faster restructuring of the group in terms of networking and digitalization.

The common shares, which are largely in the hands of the family holding Porsche SE Vz as well as the state of Lower Saxony and a state fund from Qatar, shot up by a good 17 percent on Tuesday, and in the meantime even stronger. Behind the significant price jump of the trunks, stock exchange traders suspected in particular demand from US investors for the Volkswagen depository receipts (ADR) that can be traded there. The most liquid of these certificates are secured with the common shares of the automaker, it said. A trader also speculates that investors may have gotten into trouble betting on a better development of the benefits compared to the tribes and now had to buy tribes.

WOLFSBURG (dpa-AFX) / (Dow Jones)

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Porsche stable Volkswagen share trading firmly core brand operationally black Corona pushes bosss salary message

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