FRANKFURT -- Volkswagen Group reported the largest annual losses in its history as the automaker more than doubled to 16.2 billion euros ($18.2 billion) provisions to pay for its emissions-test cheating scandal.
The company reported a net loss of 1.36 billion euros and an operating loss of 4.1 billion euros for 2015, the first annual losses since 1993, and the largest to date.
"The current crisis is having a huge impact on Volkswagen's financial position," CEO Matthias Mueller said in a statement on Friday. He said the "repercussions of the emissions issue are now quantifiable."
Analysts said the company could still face further costs, including potential U.S. Department of Justice fines as part of an expected civil settlement, and a DoJ investigation that could lead to criminal charges.
Excluding special items, the 12-brand group, which includes marques such as Audi, Porsche and Bentley, had a 12.8 billion euros operating profit, the company said.
VW had previously set aside 6.7 billion euros to cover the costs of the emissions cheating.
VW took a step on Thursday toward emerging from the crisis that has rocked the automaker for the last seven months after a preliminary deal was agreed with U.S. authorities to fix or buy back about 500,000 tainted cars in the United States.
There are questions over whether VW will offer compensation to the much larger number of diesel drivers affected outside the U.S, as well as who will be blamed for the scandal in several ongoing investigations.
"The crisis in Wolfsburg is far from over yet," said NordLB analyst Frank Schwope. "The agreement with U.S. regulators is nothing but an intermediate step in a marathon that should stretch out over the next 5-10 years."
Legal probe
VW said it could not release yet preliminary findings from a probe examining what role senior executives played in the cheating scandal. The investigation, which is being conducted by law firm Jones Day, is at an advanced stage and is due to be completed in the fourth quarter, the company said in a statement.
It expects to release the findings once a final deal has been reached with the Department of Justice.
Consolidated sales revenue last year rose by 5.4 percent to 213 billion euros, VW said. The gain was helped by improvements in the mix in the automotive business and the strong performance of the financial services division, alongside positive exchange rate effects.
VW forecast flat deliveries in 2016 and a drop in sales revenue of as much as 5 percent amid what the automaker called a "challenging environment." Its operating profit is projected to be between 5 percent and 6 percent of sales, compared with 6.3 percent in 2014.
VW cut its annual dividend 97 percent to 0.17 euros per preferred share. VW's preferred shares, down nearly 20 percent since VW admitted to cheating U.S. diesel tests in September, closed down 1.3 percent at 125.45 euros, after gaining sharply this week.
VW had 24.5 billion euros in net liquidity at the end of December. The company's operations are robust enough to allow it to overcome the crisis without cutting jobs, Mueller said today at a briefing at its Wolfsburg headquarters.
Bounce back
Erich Joachimsthaler, founder and CEO of New York-based brand-strategy firm Vivaldi Partners, said: "No question, Volkswagen will bounce back. [Its] brands are resilient and research shows that the stronger the brand, the more likely the bounce back even in light of severe transgressions."
A key factor in that effort will be restoring profit at the VW brand, the company’s largest division by sales volume and revenue. Restructuring efforts have been complicated by a dispute between influential works council chief Bernd Osterloh and Herbert Diess, the new head of the namesake passenger-car brand.
"Management should now be in a position to more actively address the turnaround plan for the VW brand," said Arndt Ellinghorst, a London-based analyst with Evercore ISI. "It has been too quiet for too long."
As a consequence of the crisis, the variable compensation of a typical VW top management will be cut 39 percent to 3.2 million euros, the company said today. The payouts had sparked a heated debate as workers and the German state of Lower Saxony, the company’s second-largest shareholder, balked at generous bonuses. Volkswagen has one of the highest-paid executive ranks in the auto industry.
VW in September admitted cheating on emissions tests for 11 million vehicles worldwide since 2009 in its biggest-ever corporate scandal, which has wiped billions of euros off its market value, forced out its long-time chief executive Martin Winterkorn and damaged VW's global image.
VW was forced to postpone its 2015 results announcement in February amid uncertainty about the financial impact of the scandal until it reached an outline deal with U.S. regulators. The automaker earlier this month postponed the release of first-quarter results for the group until May 31 from late April.
Reuters and Bloomberg contributed to this report
