Volkswagen Group remains on track for profitable growth after record year in 2010 2010 most successful year in the Group s history Best-ever figures for deliveries, sales revenue and earnings further improvement in financial strength Positive start to fiscal year 2011 Strong first quarter and record figures again forecast for full year CEO Prof. Dr. Martin Winterkorn: We are creating the optimum conditions for continued profitable growth Wolfsburg, March 10, 2011 Following the most successful year in its history, the Volkswagen Group aims to continue its sustained growth path in 2011 and the following years and to further expand its market position. Our new models, environmentally friendly technologies and modular toolkits are now laying the best possible foundations for profitable growth, said Prof. Dr. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft, on Thursday during the presentation of the Company s 2010 financial results in Wolfsburg. Our multibrand group has the technological expertise, the necessary financial strength and the right team. These allowed us to move into the fast lane in 2010 and that is where we intend to stay in the current year, he continued. The past fiscal year has brought the Volkswagen Group a good deal closer to implementing its Strategy 2018, as well as being the most successful year in its history. The Group s unit sales, market share, image ratings, earnings and financial strength all improved. This is further impressive proof of our Group s robustness and competitiveness. We significantly increased our profitability, which shows that our decision to continue our policy of disciplined cost and investment management was the right one, said CFO Hans Dieter Pötsch. No. 100 /2011
Page 2 Group figures for 2010 The Volkswagen Group s sales revenue increased by 20.6 percent in the past fiscal year to 126.9 billion (previous year: 105.2 billion). Roughly 19.8 billion of this revenue growth of 21.7 billion was attributable to the Automotive Division. Consolidated operating profit rose to a record 7.1 billion, up 5.3 billion on 2009. Volume, mix and price effects were the strongest drivers ( 4.6 billion). To this were added positive exchange rate effects ( 1 billion) and increased earnings contributions by Scania ( 1.1 billion) and the Volkswagen Financial Services ( 0.3 billion). In addition, product cost savings of 1.6 billion had a positive effect; the amount originally planned was 1 billion. This shows how systematically we are working on our cost structures and how we are continuously optimizing our processes, said Pötsch. Operating profit was impacted by higher fixed costs of 2.8 billion. Chief among these were start-up costs for new facilities and upfront expenditures for new products, underpinning the successful implementation of the Strategy 2018. The return on investment the Automotive Division s core financial management instrument rose significantly year-on-year to 13.5 percent (3.8 percent). Not only is this above the strong figures for 2007 and 2008, it also significantly exceeds the internal minimum required rate of return of 9 percent. The Financial Services Division improved its return on equity from 7.9 percent to 12.9 percent. The consolidated operating profit does not include the 1.9 billion ( 0.8 billion) proportional share of the operating profit recorded by the Chinese joint ventures. These companies are consolidated using the equity method and are therefore reflected in the Group s financial result. The earnings generated by Volkswagen s equity interest in Porsche Zwischenholding GmbH and the effects from the measurement of the put/call rights in the latter company at the reporting date also had a positive influence on the financial result. All in all, the Volkswagen Group s profit before tax last year rose by 7.7 billion to 9.0 billion. At 7.2 billion ( 0.9 billion), the after-tax profit is also a record. The Board of Management and Supervisory Board will propose to the Annual General Meeting in Hamburg on May 3 to pay an increased dividend of 2.20 ( 1.60) per ordinary share and 2.26 ( 1.66) per preferred share from Volkswagen AG s net income of 1.5 billion ( 1.1 billion). The sharp rise in consolidated profit was accompanied by another clear improvement in the Group s financial strength. Net liquidity in the Automotive Division rose by a further substantial 8 billion year-on-year to 18.6 billion. Positive contributory factors included the capital increase implemented last spring as a step towards creating the integrated automotive group with Porsche on the one hand, and the Group s strong business performance and strict cost discipline on the other. Our strong liquidity position is proof of our Company s financial solidity
Page 3 and stability. At the same time, it continues to give us the necessary financial flexibility for our investments and to implement our Strategy 2018, said Pötsch. Volkswagen invested approximately 5.7 billion in the Automotive Division in 2010, on a par with the figure for the previous year. The ratio of capital expenditure to sales revenue fell by 1.2 percentage points to 5.0 percent due to the sharp rise in sales revenue. Our disciplined cost management does not hurt our products, underscored Pötsch. It is only possible thanks to the systematic modularization of our vehicle concepts. This leads to significant savings in both unit costs and one-time expenses. We will continue to invest prudently in new production facilities and in the ecological focus of our model range, the CFO continued. All in all, Volkswagen is planning to invest 53.5 billion in the Automotive Division in the period up to 2015, plus an additional 10.6 billion in China. Markets The sharp rise in consolidated profit was accompanied by a further tangible increase in the Volkswagen Group s market position. The Group benefited above average from the strong recovery in the global automobile markets thanks to its broad-based product portfolio and strong global presence. Whereas global unit sales in the automotive industry rose by 11.4 percent to 58.7 million, the Volkswagen Group lifted deliveries to customers by 13.7 percent to 7.2 million vehicles, beating the 7 million vehicles mark for the first time. The chief growth market remained the Asia-Pacific region, and within it the Chinese market in particular. Volkswagen again extended its leading position in China, growing by 37.4 percent to nearly 2 million vehicles. Equally, the Group clearly increased its presence on a large number of other markets. South America saw extremely encouraging growth in delivery figures (up 9.9 percent to 908,000), as did the USA (up 20.9 percent to 360,000). The European business recorded a slight overall increase of 3.1 percent to 3.6 million vehicles in what was a difficult market environment. In Germany, the Volkswagen Group delivered 1.0 million vehicles last year, 16.7 percent fewer than in 2009. Nevertheless, the company outperformed the overall market, which declined by 23.4 percent due to the expiration of the government scrapping premium. Thanks to these encouraging sales figures, the Volkswagen Group s global share of the passenger car market rose from 11.2 percent to 11.4 percent.
Page 4 Brands and business fields The Volkswagen Group s biggest competitive advantage in 2010, as in the past, was its broad line-up with nine brands. This positioning has proved its worth in the economic recovery as well. Nearly all Group brands recorded higher unit sales, sales revenue and earnings in fiscal year 2010 and in some cases the increases were extremely pronounced. The Volkswagen Passenger Cars brand saw extremely dynamic growth, especially in Russia, China and the USA. Deliveries rose by almost 14 percent, exceeding the 4.5 million vehicles mark for the first time. A large number of product launches generated positive momentum, culminating in the presentation of the new Passat in the fall of 2010. At 2.2 billion (previous year: 561 million), the operating profit for the Volkswagen Passenger Cars brand almost quadrupled in the past year. This reflects both the high level of market acceptance for the products and Volkswagen s successful cost and process optimization. The same also applies to the premium brand, Audi. 2010 was the best-selling and most profitable year in Audi s history, with approximately 1.1 million deliveries (up 15 percent). The brand s operating profit more than doubled, to 3.3 billion. In addition, Audi s new products again set key trends for the industry and the company extended its portfolio to a new market segment with the launch of the Audi A1. The key figures for Lamborghini are included in the figures for the Audi brand. Škoda also saw an extremely positive fiscal year in 2010. Demand for the Czech models was particularly strong on the new growth markets of China, Russia and India. Deliveries totaled 763,000 vehicles (up 11.5 percent), the eighth record figure in a row. Škoda more than doubled its operating profit year-on-year to 447 million ( 203 million). The SEAT brand experienced a slight recovery in the past year. Deliveries rose to 340,000 vehicles (up 0.8 percent). The operating loss narrowed by 28 million to 311 million. The strong sales figures for the new Leon and Altea models had a positive effect. SEAT is still suffering from the decline in demand on the Spanish passenger car market, although last year it succeeded in regaining the market lead there after 31 years. Although conditions in the luxury segment remained difficult in 2010, Bentley was able to lift deliveries by approximately 11 percent to 5,117 vehicles. The operating loss widened by 51 million to 245 million due to changes in the market and product mix as well as upfront expenditures for new products. Volkswagen Commercial Vehicles was back on its clear growth path last year. Deliveries increased by more than 20 percent to 436,000 thousand vehicles. South America was the main growth driver. Operating profit declined by 81 million to 232 million. However, adjusted for the proceeds of approximately 600 million from the sale of the Brazilian commercial
Page 5 vehicles business to MAN, which were contained in the prior-year figure, operating profit was significantly higher than in 2009. Scania recorded clear growth on the back of the strong market recovery following a very difficult year for commercial vehicles in 2009, due to the financial crisis. Deliveries amounted to 63,700 vehicles, an increase of 46.7 percent. Operating profit increased more than fivefold, to 1.3 billion. Volkswagen Financial Services generated an operating profit of 932 million ( 606 million) in fiscal year 2010, again making a significant contribution to the Volkswagen Group s profit. More than 2.7 million new finance, leasing and insurance contracts were signed by the Division worldwide, an increase of 7.6 percent compared with the previous year. Strategy and outlook In fiscal year 2010, the Volkswagen Group systematically continued implementing its Strategy 2018, which aims to increase unit sales to more than 10 million vehicles by 2018 and to lift the Group s profit before tax to over 8 percent. In the process, the Group will also create more than 50,000 additional jobs worldwide in the period up to 2018. The core elements of the Strategy 2018 include selectively expanding the brand and product portfolio and further boosting the Group s global presence. In addition, Volkswagen aims to occupy the pole positions in the sector for quality, customer satisfaction and employer attractiveness. Further milestones on the way to achieving the integrated automotive group with Porsche, such as Volkswagen s successful capital increase, were reached on schedule in 2010. Moreover, operational-level cooperation with Porsche was intensified considerably in the past year. Additional key steps are planned for the current year. In connection with this, Volkswagen acquired the automobile trading business of Porsche Holding Salzburg (PHS) effective March 1. PHS is one of the most successful and most profitable automotive trading companies in Europe and will further strengthen the Volkswagen Group s sales activities. In addition, Volkswagen will continue to extend its e-mobility activities in 2011. Among other things, it plans to set up an E-mobility Campus in Wolfsburg, investing 80 million here in the coming years in order to bundle the Group s expertise in this field at headquarters. This underscores Volkswagen s ambitions to be the leader from an ecological perspective, too.
Page 6 At the level of its operating business, the Volkswagen Group expects the positive trend seen in the previous fiscal year to continue in 2011. At approximately 1.2 million vehicles worldwide, global deliveries in the first two months were up 17.5 percent. This means that the Group s growth again outperformed the market. We are highly satisfied with our current business performance and expect a strong first quarter on all fronts, said Winterkorn. For the year as a whole, the Board of Management is forecasting a further improvement in deliveries, sales revenue and operating profit, and hence renewed record figures despite a potential decrease in positive volume effects due to ongoing volatility in interest and exchange rates, and uncertainty on the commodities markets. In the medium to long term, the Board of Management expects that the Volkswagen Group will be able to leverage its competitive advantages to an even greater extent. Our brands already offer mobility solutions to meet every need and in every vehicle class, all around the globe. This diversity is our strength. In addition, we will systematically extend our technological leadership, emphasized Winterkorn. The Volkswagen Group will also grow at a qualitative level in the coming years. We combine volume growth, the highest possible product quality, and customer and employee satisfaction with sound finances and steady increases in profitability. This means we are now more convinced than ever before that we can reach our strategic goals, the CEO summed up. Further information on the Annual Media Conference can be accessed on the websites at www.volkswagen-media-services.com and www.volkswagenag.com/ir. Volkswagen Group Communications Head of Group Investor Relations/Spokesperson for Finance Christine Ritz Phone: +49 (0) 53 61 / 9-4 98 40 Fax: +49 (0) 53 61 / 9-3 04 11 E-mail: christine.ritz@volkswagen.de Spokesperson for Finance Michael Brendel Phone: +49 (0) 53 61 / 9-3 93 56 Fax: +49 (0) 53 61 / 9-5 73 93 56 E-mail: michael.brendel@volkswagen.de www.volkswagenag.com www.volkswagen-media-services.com