Volkswagen AG: Interim Report January-June 2005
WOLFSBURG, Germany--July 29, 2005--Volkswagen AG (FWB:VOW)(LSE:VKW):-- Increase in Volkswagen Group operating profit for the period January to June 2005 of 61.6% year-on-year to EUR 1.4 billion (previous year: EUR 851 million)
-- Automotive Division operating profit of EUR 871 million in the first six months of 2005 more than doubled year-on-year (previous year: EUR 341 million); Financial Services Division operating profit of EUR 504 million remains at high prior year level (EUR 510 million)
-- Automotive Division cash flows from operating activities of EUR 3.3 billion (previous year: EUR 3.8 billion) in first six months still negatively affected by the introduction of new models; 9.9% rise year-on-year in second quarter of 2005
-- At 4.5%, ratio of investments in property, plant and equipment (capex) to sales revenue in the Automotive Division significantly lower in the first six months of 2005 than in 2004 (6.0%), lifting net cash flow to EUR 658 million (previous year: EUR 270 million)
-- Further improvement in net liquidity in the Automotive Division to EUR -1.1 billion
-- New Group products successful:
-- New Group models help further expand market share in Western Europe year-on-year; Audi brand with a record level of global deliveries
-- Golf in pole position for Western European registration statistics; Touran again the most popular van in Germany in its second year; Multivan/Transporter also continues to lead its segment
-- Fox, new Polo and new Passat saloon start with good sales figures in Europe; Bentley Continental Flying Spur launched successfully in the market
-- Jetta is successfully introduced in the USA and is presented in Europe
-- Advance sales of the new Passat Variant begin; first deliveries to customers starting in mid-August 2005
-- World premiere for the SEAT Leon at the Barcelona International Motor Show
-- The world's most powerful diesel car presented: the new Audi A8 4.2 TDI quattro
January-June 2005 2004 +/- (%) ---------------------------------------------------------------------- Volkswagen Group: Deliveries to customers '000 units 2,559 2,516 + 1.7 - excluding China '000 units 2,293 2,206 + 4.0 Vehicle sales '000 units 2,543 2,646 - 3.9 - excluding China '000 units 2,337 2,313 + 1.0 Production '000 units 2,634 2,670 - 1.3 - excluding China '000 units 2,418 2,330 + 3.8 Sales revenue EUR million 46,016 45,158*) + 1.9 Operating profit EUR million 1,375 851 + 61.6 Profit before tax EUR million 672 639 + 5.2 Profit after tax EUR million 403 383 + 5.2 Automotive Division: Cash flows from operating activities EUR million 3,334 3,765 - 11.4 Cash flows from investing activities EUR million 2,676 3,495 - 23.5 Net liquidity at June 30 EUR million - 1,125 - 2,184 + 48.5 ---------------------------------------------------------------------- *) Restated to reflect the reclassification of the income statement in the 2004 consolidated financial statements.
As expected, there was no significant improvement in the economic environment in the first six months of 2005. Although the German passenger car market developed better in the second quarter of 2005 than in the first three months, the overall situation in the most important automotive markets remained difficult. Despite the slight improvement in exchange rates for eurozone exporters in recent months, the global situation remains unfavorable for us.
In addition, we expect that competitive pressures will tend to increase and that the cost of raw materials - especially steel and plastics - will remain at high levels. Moreover, we believe that the high oil price and the consequent jump in fuel prices to new record highs will further dampen automotive consumer confidence.
We are expecting an improvement in our delivery figures for the US passenger car market on the back of the model changes for the Jetta and the Passat and the full availability of the Audi A4 and Audi A6 in the second half of the year. In Western Europe, we believe that with our updated model program featuring the new Passat, Golf Plus, Polo and Fox, we will build on the good sales development in recent months and further extend our market share. The market launches of the Passat Variant, Audi RS 4 and SEAT Leon in the second half of the year will also make a significant contribution to this growth. For the year as a whole, we are therefore confident that deliveries to customers will exceed the previous year's volume.
We are systematically continuing the Group-wide ForMotion program and will achieve our goal of a EUR 3.1 billion earnings contribution in 2005. In this context, we have initiated measures to restore our competitive position and return to profitability in the USA. In addition, we will restructure our business in China.
For this reason, we continue to expect a year-on-year improvement in both 2005 operating profit after special items and profit before tax.
Wolfsburg, July 29, 2005 Volkswagen AG The Board of Management
(The full interim report is available at " http://www.volkswagen-ir.de ".)
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