Despite significant problems due to the chip crisis, Volkswagen earned significantly more again in 2021 – but the war in Ukraine and the tough supply bottlenecks are keeping the group under pressure.
As the Wolfsburg-based company announced, based on preliminary figures, the profit of Europe’s largest car group rose by almost 75 percent to 15.4 billion euros compared to 2020. Sales also increased after the corona-related difficulties of the previous year. It grew by 12.3 percent to 250.2 billion euros.
Prices could go up
Many customers currently have to wait a long time for their car. CFO Arno Antlitz indicated that prices could also rise as a result of rising energy and raw material costs. Much depends on the development and duration of the conflict in Eastern Europe. Should this last longer, additional savings could possibly arise within the company. VW is sticking to the investments.
While the financial figures improved significantly in 2021, the group performed worse in terms of deliveries. The number of vehicles handed over worldwide fell by 4.5 percent to almost 8.9 million. A decline was also reported after the first two months of this year, down by around a sixth. The core brand just imposed an order freeze for plug-in hybrids due to a lack of parts. Particularly painful for VW: The most important market, China, was down almost 17 percent in January and February.
Toyota in deliveries ahead of VW
The Toyota Group delivered about 10.5 million cars worldwide and took the lead in this regard. The VW group sales were recently 2.4 million below the value of the pre-corona year 2019. However, the demand for electric and hybrid cars developed well. Deliveries of pure electric vehicles almost doubled.
Bottlenecks in electronic components have weighed heavily on the industry in recent months. The shortage is likely to continue for a while. Antlitz was relatively confident: “We can see that the supply of semiconductors will improve, especially in the second half of the year.” The lack of chips remains a structural problem.
Uncertainty factor Ukraine conflict
The ambitions for the new year are big. The VW top expects – if things go well – with higher earning power and more sales. “But all of this is subject to further development,” says Antlitz. “It is still unclear how the Ukraine conflict will affect the entire supply chain and the global economy.”
At VW, for example, some locations are already stranded because there are no cable harnesses manufactured in western Ukraine. After the plants in Saxony, there should again be missed shifts and short-time work at the Wolfsburg headquarters. “We’re currently still getting some supplies, but of course it’s difficult,” said the chief financial officer on the situation in Ukraine. “We are trying to support the suppliers. However, there will be further restrictions over the next few days. We are also working on strategies to switch to other suppliers in Europe and North America.”
“One or the other will have to be passed on”
It cannot be ruled out that some of the rising energy prices will eventually have to be passed on to consumers. Appropriate hedging transactions ensured stability. “But of course that will affect our business in the medium term – and of course one or the other will have to be passed on.”
The management had ruled out new austerity programs after a dispute between works council chief Daniela Cavallo and CEO Herbert Diess at the end of last year. If costs need to be reduced further, then only within the framework of existing agreements. A 5 percent reduction was planned by 2023. Regarding Ukraine, Antlitz said the major investment projects would last. But: “If the crisis persists, there may be a situation where you have to make significant adjustments to the normal fixed costs.”
Above all, Diess strives for higher productivity and efficiency. At the same time, the group is investing a high double-digit billion sum in digital and e-models over the next five years. At the end of 2021, the VW Group had around 672,800 employees.
Production in Russia is to be suspended
Like many other companies, Volkswagen initially wants to suspend production in Russia. The same applies to car exports to the country. Diess warned that the war could have even more severe effects on the European economy than the Corona crisis. A prolonged military conflict would probably hit the region “much worse” than the spread of the Covid 19 pathogen, the manager recently told the Financial Times. Permanently damaged global supply chains are likely to lead to “huge price increases, energy shortages and inflation”. “That could be very risky for the European and German economy.”
For the time being, the profits are bubbling up again – the shareholders should benefit from this. A dividend of EUR 7.50 per common share and EUR 7.56 per preferred share is to be proposed to the Annual General Meeting on May 12, more than half as much as in the previous year. The umbrella company Porsche SE, in which the Porsche and Piëch families have bundled their shares in VW, expects a pre-tax inflow of around 1.18 billion euros from the distributions. (dpa)