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Volkswagen Reports 20 Percent Profit Jump

Audi, Porsche results lead to strong results.

by on Feb.27, 2015

VW CEO Martin Winterkorn is expressing caution about 2015 after a strong 2014.

Volkswagen reported a 20% increase in net profits in 2014 and despite predicting it would meet it’s lofty ambition of selling 10 million units this year – three years early – it is cautious about 2015.

“Given the subdued growth prospects in regions outside China, there is no guarantee that 2015 will be a successful year – either for the industry or for the Volkswagen Group”, said Chief Financial Officer Hans Dieter Pötsch.

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The automaker was led by strong sales years by its luxury unit, Audi, and sports car maker, Porsche. Actually, if you include heavy-duty trucks, VW exceeded that number by delivering a total 10.14 million, which is an increase of 4.2%. However, the number was meant for passenger cars and it expects to hit the number.

However, VW’s senior leaders are concerned about the impact of the political uncertainty and strong currency fluctuations in several markets, particularly Russia and Brazil.

“In light of this, the scenarios underlying our forecast are based on conservative assumptions,” Pötsch said. “Nevertheless, our goal is not only to increase our volumes, but also to lift sales revenue and earnings again.”

The company’s operating margin improved to 6.3%, up from 5.9%, which was at the upper edge of VW’s forecast for 2014. For 2015, Volkswagen forecasts an operating return on sales between 5.5% and 6.5%.

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The Group’s profit before tax increased to 14.8 billion euros compared with last year’s 12.4 billion euros. Strong results in China helped significantly with that result and VW expects more of the same from the country in 2015.

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“We can look back on the past fiscal year with satisfaction: despite the difficult economic environment, we achieved our goals for 2014. At the same time, our forward-looking efficiency program ‘Future Tracks’ has laid the groundwork that will enable us to continue our successful trajectory with all our strength”, said Martin Winterkorn, chairman of the Board of Management of Volkswagen.

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Sales revenue rose 2.8 percent last year to 202.5 billion euros. Volkswagen said it would raise its dividend to 4.80 euros per ordinary share, up from 4.00 euros in 2013.

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One Response to “Volkswagen Reports 20 Percent Profit Jump”

  1. Jorge says:

    Without the growth in China a lot of auto makers would be hurting for profits.