Strong first quarter for Volkswagen Group

Europe
Published:  11 May, 2021

Despite the Covid-19 restrictions, Volkswagen Group has reported a strong financial performance with significant improvements over the weaker prior-year period that was impacted by the pandemic. Some key figures came in above pre-crisis levels from the first quarter of 2019.

Sales revenue increased by 13.3% to a high level of €62.4 billion. Operating profit rose to €4.8 billion. The higher earnings were mainly due to increased unit sales, improvements in the product mix, positive effects from the valuation of raw material hedges and initial success from the fixed cost reduction program.

The Automotive Division underscored the robustness of its business model with a high adjusted net cash flow of €5.5 billion. The division’s net liquidity rose to €29.6 billion. Volkswagen raised the outlook for its operating margin for full year 2021 to 5.5 to 7%. It was previously 5 to 6.5%.

In the first quarter, deliveries from the Volkswagen Group increased significantly by 21.2% to 2.4 million vehicles over the same period in 2020, which was already impacted by the Covid-19 pandemic. A key driver of this increase in volume was China, the group’s largest single market. This market showed the strongest recovery over the prior year, up 61.4%.

Due to increased sales volumes and stronger demand for higher-margin models, group sales revenue rose significantly by 13.3% to a strong €62.4 billion, also exceeding the pre-crisis level of 2019 (€60 billion). Operating profit in the prior-year quarter was only €0.9 billion due to the pandemic and climbed to €4.8 billion in 2021. The operating return on sales was therefore a strong 7.7%.

Outlook

The Group anticipates that deliveries to customers in 2021 will be significantly up on the previous year amid continued challenging market conditions, depending on the development of the Covid-19 crisis. Sales revenue of the Volkswagen Group in 2021 are expected to be significantly higher than the prior-year figure. In terms of the operating profit, the group anticipates an operating return on sales of between 5.5 and 7% in 2021.

Credit: Porsche