Volkswagen Group closes 2020 stronger than expected and accelerates transformation

The Volkswagen Group closed fiscal year 2020 stronger than expected despite the Covid-19 pandemic

The Volkswagen Group closed fiscal year 2020 stronger than expected despite the Covid-19 pandemic. Important strategic steps accelerated the Group’s transformation into a tech company at the same time. The Group’s effective crisis management, the rapid recovery of its largest single market China and particularly the more stable premium and financial services business were key to the strong performance and successful containment of the pandemic effects. Sales revenue amounted to EUR 222.9 billion (–11.8 percent), outperforming sales volumes (–16.4 percent). Operating profit before special items (diesel) reached a solid level of EUR 10.6 billion (–45.0 percent) despite the pandemic. The operating return on sales before special items stood at 4.8 (7.6) percent. The robust business model and rigorous working capital management produced a strong net cash flow of EUR 6.4 billion (–41.3 percent) in the Automotive Division. The net liquidity of the Automotive Division could be lifted by 25.9 percent to a very solid EUR 26.8 billion. The Board of Management and Supervisory Board are proposing an unchanged dividend of EUR 4.80 per ordinary share and EUR 4.86 per preferred share. This would take the payout ratio of 29.0 percent close to the strategic target level of 30 percent. Earnings per ordinary share were EUR 16.60 (26.60) and earnings per preferred share were EUR 16.66 (26.66).

Frank Witter, member of the Group Board of Management responsible for Finance and IT, said: “Covid-19 is posing unprecedented challenges for us all. Last year, the Volkswagen Group succeeded in containing the effects of the pandemic on its business and laying important strategic foundations for its transformation at the same time. The financial results now available are far better than originally expected and show what our company is capable of achieving, especially in a crisis. We intend to carry over the strong momentum from the significantly better second half into the current year, and the programs for reducing our fixed costs and in procurement will make us more robust in the long term. We are thus more optimistic and are striving to hit the higher end of the range targeted for the Group’s operating return on sales.”

In fiscal year 2020, the Volkswagen Group sold 9.2 million vehicles (–16.4 percent) and slightly increased its share of the global passenger car market to 13.0 (12.9) percent. As part of the global e-offensive, 422,000 electric vehicles were delivered to customers, three times as many as in the preceding year. Sales revenue amounted to EUR 222.9 billion. The 11.8 decrease year-on-year was mainly attributable to falling volumes as a result of the Covid-19 pandemic. Operating profit before special items nevertheless came in at a solid EUR 10.6 (19.3) billion, which amounts to an operating return on sales before special items of 4.8 (7.6) percent. In addition to the decline in the sales volume, negative exchange rate effects constituted adverse factors, and one-off expenses for restructuring measures of EUR 0.5 billion also contributed to the reduction in profit. Positive factors were lower fixed costs. The Volkswagen Group’s profit before tax amounted to EUR 11.7 (18.4) billion. The return on sales before tax fell to 5.2 (7.3) percent. The share of operating profit attributable to the Chinese joint ventures amounted to EUR 3.6 (4.4) billion.

At EUR 6.4 (10.8) billion, net cash flow in the Automotive Division came in clearly positive despite the Covid-19 pandemic; the year-on-year decline was particularly due to the lower profits and higher cash outflows attributable to diesel. Successful inventory management was an especially positive factor here. Net liquidity improved to EUR 26.8 (21.3) billion, partly due to the successful placement of hybrid bonds. In spite of the decrease in absolute terms in research and development costs in the Automotive Division, the R&D ratio was, at 7.6 (6.7) percent, higher than in the previous year owing to the substantial pandemic related decline in sales revenue. As a consequence of a significant fall in capex, the Automotive Division’s ratio of capex to sales revenue even declined to 6.1 (6.6) percent.


The Volkswagen Group anticipates that – assuming successful containment of the Covid-19 pandemic – deliveries to customers in 2021 will be significantly up on the previous year amid continued challenging market conditions. Challenges will arise in particular from the economic situation, increasing intensity of competition, volatile commodity and foreign exchange markets, securing supply chains and more stringent emissions-related requirements. We expect the sales revenues of the Volkswagen Group and the Passenger Cars Business Area in 2021 to be significantly higher than the prior-year figure. In terms of operating profit for the Group and the Passenger Cars Business Area, we forecast an operating return on sales in the range of 5.0–6.5 percent in 2021. For the Commercial Vehicles Business Area, we anticipate an operating return on sales of 4.0–5.5 percent before restructuring measures amid a significant year-on-year increase in sales revenue. We expect the Power Engineering Business Area to reach the break-even point amid a noticeable decline in sales revenue compared with the previous year. For the Financial Services Division, we forecast that sales revenue will be noticeably higher than the prior-year figure and that the operating result will be in line with the previous year.

In the Automotive Division, we expect the R&D ratio to come in at around 7 percent in 2021 and the ratio of capex to sales revenue at around 6 percent. For 2021, we expect cash outflows resulting from diesel to remain more or less the same and effects from mergers & acquisitions to be significantly higher. Consequently, we estimate that the net cash flow will be in line with the previous year. Net liquidity in the Automotive Division will probably see a moderate increase in 2021. We expect the return on investment (ROI) to be perceptibly higher than our minimum required rate of return.

Volkswagen Group

2020 2019 %
Volume Data1 in thousands
Deliveries to customers (units) 9,305 10,975 –15.2
Vehicle sales (units) 9,157 10,956 –16.4
Production (units) 8,900 10,823 –17.8
Employees at Dec. 31 662.6 671.2 –1.3
Financial Data (IFRSs), € million
Sales revenue 222,884 252,632 –11.8
Operating result before special items 10,607 19,296 –45.0
Operating return on sales before special items (%) 4.8 7.6
Special items –931 –2,336 –60.1
Operating result 9,675 16,960 –43.0
Operating return on sales (%) 4.3 6.7
Earnings before tax 11,667 18,356 –36.4
Return on sales before tax (%) 5.2 7.3
Earnings after tax 8,824 14,029 –37.1
Automotive Division2
Total research and development costs 13,885 14,306 –2.9
R&D ratio (%) 7.6 6.7
Cash flows from operating activities 24,721 30,733 –19.6
Cash flows from investing activities attributable to operating activities3 18,364 19,898 –7.7
of which: capex 11,065 14,007 –21.0
capex/sales revenue (%) 6.1 6.6
Net cash flow 6,357 10,835 –41.3
Net liquidity at Dec. 31 26,796 21,276 + 25.9
Return on investment (ROI) in % 6.5 11.2
Financial Services Division
Return on equity before tax4 (%) 8.8 10.8

Volkswagen AG

2020 2019 %
Volume Data in thousands
Employees at Dec. 31 118.7 119.2 –0.4
Financial Data (HGB), € million
Sales revenue 67,535 80,621 –16.2
Net income for the fiscal year 6,338 4,958 + 27.8
Dividends (€)
per ordinary share 4.80 4.80
per preferred share 4.86 4.86

1Volume data including the unconsolidated Chinese joint ventures. These companies are accounted for using the equity method. Prior-year deliveries updated to reflect subsequent statistical trends.
Including allocation of consolidation adjustments between the Auto­motive and Financial Services divisions.
Excluding acquisition and disposal of equity investments: €17,175 (19,182) million.
Earnings before tax as a percentage of average equity.

SOURCE: Volkswagen