VW targets steady 2012 profit as Europe faces slowdown
Volkswagen Group targets aims to match last year's record profit in 2012 as the next generations of the Audi A3 and VW Golf help offset softer demand in Europe.
"Despite all the uncertainties, we remain cautiously optimistic for the coming months," CEO Martin Winterkorn said in a speech at the company's headquarters in Wolfsburg. "Our goal for operating profit is to repeat the high level we achieved in 2011."
Volkswagen will introduce 40 new and upgraded models this year, countering an anticipated decline in western European car demand. The company aims to increase operating profit in 2013, it said in its annual report.
The company is continuing to work on an integration of Porsche Automobil Holding SE's carmaking operation. Europe's largest automaker reported record profit in 2011, with earnings before interest and taxes gaining 59 percent to 11.3 billion euros ($14.8 billion).
In addition to weaker demand in Europe, the company faces extra costs from the introduction of a new generation of its best-selling Golf hatchback, which is based on technology that will also underpin Audi, Seat and Skoda models.
VW, which aims to surpass General Motors Co. as the world's biggest carmaker by 2018, aims to outpace the "low single-digit" growth rate in the global car market this year, sales chief Christian Klingler said last week at the Geneva auto show.
The company sold a record 8.27 million vehicles in 2011. The German company has expanded production of SUVs such as the VW Tiguan and Audi Q5 to meet demand in the United States and China, its largest market.
Volkswagen's preferred shares have climbed 21 percent over the past 12 months, making it the third-best performer on the 14-member Euro Stoxx autos and parts index and valuing the company at 62.7 billion euros.
Volkswagen raised the dividend for 2011 by 35 percent to 3.06 euros per preferred share from 2.26 euros a year earlier. The dividend per common share for last year will be 3 euros.
The German carmaker has budgeted a record 62.4 billion euros under its rolling five-year business plan to invest in factories and new models, with an additional 14 billion euros earmarked for its joint ventures in China.
Future growth may also come from pending mergers. VW is exploring options to combine with majority shareholder Porsche SE after scrapping plans last year for a merger because of legal tangles. To avoid further delays, VW is closing in on a deal to purchase the remaining 50.1 percent stake in Porsche's automaking business, people familiar with the matter said on Feb. 27.
Approval from German tax authorities is one of the hurdles to an agreement, which VW and Porsche are still negotiating, the people said, declining to be identified discussing private talks.
VW is considering setting up an umbrella company to purchase the stake and avoid taxes that would eat up savings from the deal, according to one of the people.
"There are still some hurdles to cross on the way toward full integration" with Porsche, Winterkorn said in a speech today. "What I can tell you is that the integrated Volkswagen and Porsche group will happen."
Volkswagen's 2011 net income was lifted by a gain from the revaluation of the Porsche options. The figure more than doubled to 15.4 billion euros from 7.23 billion euros.
VW last year took a majority stake in German truckmaker MAN SE, raising its holding to 55.9 percent. VW has been seeking closer links between MAN and Soedertaelje, Sweden-based Scania AB, which it also controls.
VW's goal is to forge a three-way truckmaking alliance to save as much as 1 billion euros in annual costs, the German auto manufacturer has said. The automaker, which also owns the Bentley, Lamborghini and Bugatti brands, wants to hire more than 50,000 workers through 2018 as it targets more than 10 million autos per year.
The company, already employs more than 500,000 people, plans to increase the number of factories to about 70 from 62.
Source: BloombergContact Automotive News