Volkswagen has successfully contained its losses for 2020 despite the effects the coronavirus pandemic and the global semiconductor shortage is having on the sector, according to their latest fiscal report.
Volkswagen ID.3. Credit: Rutger van der Maar / Flickr
Year-on-year sales were only down 11.8% from 2019 with total revenue of €222.9 billion, outperforming sales volumes, which sat at -16.4% while operating profit for the year reached a solid €10.6 billion.
Read more: VW CEO Diess expects significant market upturn for 2021
The company reported its operating return on sales before special items for the year stood at 4.6% for the same time frame.
The automotive company expect gains for most of 2021 owing to a significant rise in deliveries and sales revenue year-on-year and estimate operating return-on-sales should be anywhere between 5 and 6.5% by the end of the year despite the continued market strife projected.
VW's board are suggesting an unchanged dividend of €4.8 per share.
For the entire fiscal year, VW sold 9.2 million vehicles, seeing a drop of 16.4% and slightly increased its share on the global passenger car market to 13%.
This included raw new electric vehicles (NEV) sales of 422,000, more than three times 2019 numbers.
Drops in sales in all other areas were almost universally accredited to the Covid-19 pandemic.
Frank Witter, member of the Group Board of Management responsible for Finance and IT at VW admitted the Covid-19 pandemic has had effects on the sector as a whole.
He said the effects the crisis had on the company were mitigated owing to a mix of effective crisis managing, robust premium and financial services and the quick recovery of its core Chinese market.
He added: The financial results now available are far better than originally expected and show what our company is capable of achieving, especially in a crisis. We intend to carry over the strong momentum from the significantly better second half into the current year, and the programs for reducing our fixed costs and procurement will make us more robust in the long term.
"We are thus more optimistic and are striving to hit the higher end of the range targeted for the Group’s operating return on sales.”
The pandemic has also accelerated the company's transition into the tech field owing to partnerships it forged as part of its pandemic recovery.
VW is set to team up with Microsoft to deliver on autonomous vehicles.
The automaker's software wing, Car.Software is set to utilise Microsoft Azure - the US tech giant's cloud platform - to simplify the advancement of self-driving vehicles and implement it into cars.
Read more: VW and Microsoft team up for self-driving cars
The company predict further challenges will arise in particular from the economic situation, increasing intensity of competition, volatile commodity and foreign exchange markets, securing supply chains and more stringent emissions-related requirements.
The company were recently fined €150m by the European Union for failing to hit emissions targets.
At €6.4 billion, net cash flow in the Automotive Division came in clearly positive despite the Covid-19 pandemic and year-on-year decline was particularly due to the lower profits and higher cash outflows attributable to diesel.
VW attribute inventory management as an especially positive factor here.
The semiconductor shortage has hit most companies in the automotive sector hard, and VW has considered claiming damages for the losses sustained owing to the issue.
This has also briefly halted many automaker's energy transitions as many look to shift production to electric vehicles in light of legislative bans on petrol and diesel engines alongside emissions and climate targets.
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