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Volkswagen Reports Record 2011 Profit on SUV Sales

February 24, 2012
3 min to read


Volkswagen AG, Europe’s largest automaker, reported record 2011 profit as demand increased for Audi and VW sport-utility vehicles.


Earnings before interest and taxes advanced 58 percent to 11.3 billion euros ($15.1 billion), the Wolfsburg, Germany-based carmaker said in a statement today. Profit matched the 11.3 billion-euro average estimate of 22 analysts surveyed by Bloomberg. Revenue gained 26 percent to 159 billion euros.

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Chief Executive Officer Martin Winterkorn is adding factories in a bid to surpass General Motors Co. as the world’s biggest carmaker. VW, which delivered a record 8.27 million vehicles in 2011, aims for sales growth this year outpacing the market’s expansion. The German company has expanded production of SUVs such as the VW Tiguan and Audi Q5 to meet high demand in the U.S. and China, its largest market.


“There’s not a real positive surprise, so there might be some disappointment,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “The quality of the earnings is probably better, but more explanation is needed.”


The stock rose 10 cents, or 0.1 percent, to 139.25 euros in Frankfurt trading today. The shares have gained 20 percent this year, valuing the carmaker at 61 billion euros.


Volkswagen raised the dividend for 2011 by 35 percent to 3.06 euros per preferred share from 2.26 euros a year earlier. The dividend per common share for last year will be 3 euros. The carmaker will release more details on 2011 earnings on March 12.


Future growth may also come from pending mergers. VW is exploring options to combine with majority shareholder Porsche SE after scrapping plans last year for a merger because of legal tangles.

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To avoid further delays, VW may drop the full merger and instead buy Porsche’s carmaking business, two people with direct knowledge of the situation said in November. VW already owns 49.9 percent of Porsche’s automaking business and holds an option to purchase the remaining 50.1 percent.


Volkswagen’s 2011 net income was lifted by a gain from the revaluation of the Porsche options. The figure more than doubled to 15.4 billion euros from 7.23 billion euros.


VW last year took a majority stake in German truckmaker MAN SE, raising its holding to 55.9 percent. VW has been seeking closer links between MAN and Soedertaelje, Sweden-based Scania AB, which it also controls, with a goal of forging a three-way truckmaking alliance. Such a tie-up may save as much as 1 billion euros in annual costs, VW has said.


VW’s net liquidity in 2011 dropped 8.6 percent to 17 billion euros because of 7 billion euros in spending on equity investments, including the increase in the MAN stake.


“VW generated a negative cash flow in the fourth quarter,” Michael Punzet, a DZ Bank analyst who recommends buying the shares, said in a note to investors. “In our view, this is mainly related to production cuts at year end and some investments at plants” for a new underbody that will be used as the basis for several vehicles.

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Investments in property, plants and equipment in 2011 rose 40 percent to 7.93 billion euros, VW said today.


The maker of the Golf hatchback, VW’s best-selling vehicle, plans to spend a record 62.4 billion euros over the next five years on plants, models, research and development to underpin its global expansion. VW wants to hire more than 50,000 workers through 2018 as it targets more than 10 million autos per year.


Daimler AG this month forecast that operating profit this year will be “in the magnitude” of 2011’s 8.98 billion euros. CEO Dieter Zetsche has vowed to retake the luxury-car lead from Bayerische Motoren Werke AG after slipping last year to third behind Audi. Daimler predicts industrywide auto deliveries will rise 4 percent globally this year.

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