Europe’s largest carmaker Volkswagen has increased profits despite production disruptions due to missing chips and persistent supply shortages. With group sales increasing by around twelve percent to 279 billion euros, operating profit (EBIT) climbed by 12.5 percent to 22.5 billion euros last year, as the group announced on Tuesday evening. The figures were therefore within the expected range.
Since the cash inflow of five billion euros was well below the 8.6 billion euros achieved in the previous year, the Wolfsburg-based company announced this before the actually planned publication at the balance sheet press conference in March. The return on sales was around 8.1 percent and thus in the upper third of the forecast range of between 7.0 and 8.5 percent.
A high number of vehicles ties up funds
The deviation in the net cash flow is mainly due to the unstable supply situation and disruptions in the logistics chains, especially at the end of the year, explained VW. The bottlenecks in semiconductors had caused a high stock of unfinished vehicles in the past year, which could only be delivered step by step. The funds tied up in working capital were therefore significantly higher than expected. In its current planning, however, the group assumes that this will reverse itself in the course of this year, as inventories decrease and production is running smoothly again.
Despite the sluggish business, the world’s second largest car company had a lavish liquidity cushion. At the end of the year, 43 billion euros were booked here. This includes around 16 billion from the IPO of the sports car subsidiary Porsche AG. Volkswagen needs the money to be able to make the high investments in new electric cars, battery cell factories and digital services.
Cash inflow disappointed, share under pressure
According to the preliminary business figures at the end of the Dax, the preferred shares of Volkswagen (VW) lost 1.8 percent to 128.90 euros on Wednesday. They are thus continuing their consolidation after climbing to EUR 133.88 on Thursday, the highest level since the price slide on December 19. In view of the weak auto sales figures in China the entire industry was under pressure: its sub-index, which brought up the rear in the broader Stoxx Europe 600, lost almost 1 percent.
Analysts unanimously cited the clearly missed expectations for the cash inflow as the reason for the negative price reaction of VW shares to the company figures – the other key figures were as expected. The inflow of funds was 5 billion euros in 2022 – according to the Barclays experts, the consensus estimate was 5.6 billion euros, while VW had aimed for at least the previous year’s figure of 8.6 billion euros. The reasons given by Wolfsburg were “the unstable supply situation and disruptions in the logistics chains, especially at the end of the year”.