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.
VW Group misses CO2 target a little more clearly
The VW Group missed the fleet targets to reduce CO2 emissions last year a little more clearly than previously calculated – but still only just barely. Overall, the emissions of newly sold cars in 2020, together with the values of some small manufacturers in the relevant “pool” in the EU, were around 0.8 grams per kilometer above the permitted average. In January, VW reported a deviation of around 0.5 grams from the target value. The company named updated calculations as the reason on Tuesday. The EU will announce the official result in the coming months.
Regardless of missing the target mark, VW was able to achieve significant savings in climate-damaging CO2 in absolute terms last year. The output fell by a good fifth. This year the overall target should be achieved, especially since the group wants to bring several more electric models onto the market.
However, environmentalists criticize the calculation of the values themselves and complain about various loopholes. Greenpeace emphasized that, above all, the double consideration of particularly clean models via “supercredits” or the possibility of de facto deducting particularly heavy models have long resulted in the real climate footprint being far worse than shown on the outside.
In addition, hybrid models remained a sham because the combustion engine is switched on in most situations. The BUND traffic expert, Jens Hilgenberg, said: “With the sale of a large number of plug-in hybrids and their unrealistically low, official consumption values, the EU’s CO2 fleet limit for 2020 was almost reached, despite ever larger, heavier cars. A purely theoretical contribution to climate protection that is based on loopholes in the regulations and counteracts the achievement of the climate targets. “
In the EU, stricter guidelines for CO2 emissions have been in place since 2020. Across the industry – apart from transitional regulations – this should be 95 grams per kilometer driven. Each car manufacturer has its own individual goals depending on the market position and the severity of the models.
In XETRA trading, VW shares now gain 6.30 percent to EUR 207.05.
WOLFSBURG (dpa-AFX) / (Dow Jones)
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Volkswagen share rises core brand operationally black Corona pushes bosss salary