Results of Operations

RESULTS OF OPERATIONS OF THE GROUP

The Volkswagen Group generated sales revenue of €113.8 billion in 2008. This 4.5% increase is primarily attributable to the consolidation of Scania from July 22, 2008. The positive business development also contributed to this increase. The largest proportion of sales revenue was generated outside Germany, at 75.7% (75.3%). The cost of sales rose by 4.3%, while the gross margin was 15.1%, marginally higher than in the previous year. The Group’s operating profit was €6.3 billion (€6.2 billion). In spite of the difficult economic climate, we exceeded our high level of earnings in fiscal year 2007 as we had set out to do. The operating return on sales remained constant at 5.6%.

CONSOLIDATED PROFIT

The Volkswagen Group’s profit before tax in 2008 amounted to €6.6 billion (€6.5 billion), up slightly on the high level recorded in the previous year. The return on sales before tax slipped back to 5.8% (6.0%). The Volkswagen Group’s profit after tax was €4.7 billion and thus 13.7% higher than in 2007.

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INCOME STATEMENT BY DIVISION

 

 

 

 

 

 

Volkswagen Group

 

Automotive*

 

Financial Services

€ million

 

2008

 

2007

 

2008

 

2007

 

2008

 

2007

*

Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.

Sales revenue

 

113,808

 

108,897

 

102,632

 

98,752

 

11,176

 

10,145

Cost of sales

 

96,612

 

92,603

 

87,895

 

84,674

 

8,717

 

7,929

Gross profit

 

17,196

 

16,294

 

14,737

 

14,078

 

2,459

 

2,216

Distribution expenses

 

10,552

 

9,274

 

10,061

 

8,781

 

491

 

493

Administrative expenses

 

2,742

 

2,453

 

2,254

 

1,970

 

488

 

483

Net other operating income

 

2,431

 

1,584

 

3,006

 

1,867

 

–575

 

–283

Operating profit

 

6,333

 

6,151

 

5,428

 

5,194

 

905

 

957

Share of profits and losses of equity-accounted investments

 

910

 

734

 

809

 

580

 

101

 

154

Other financial result

 

–635

 

–342

 

–560

 

–300

 

–75

 

–42

Financial result

 

275

 

392

 

249

 

280

 

26

 

112

Profit before tax

 

6,608

 

6,543

 

5,677

 

5,474

 

931

 

1,069

Income tax expense

 

1,920

 

2,421

 

1,668

 

2,254

 

252

 

167

Profit after tax

 

4,688

 

4,122

 

4,009

 

3,220

 

679

 

902

Minority interests

 

–65

 

2

 

–71

 

2

 

6

 

Profit attributable to shareholders
of Volkswagen AG

 

4,753

 

4,120

 

4,080

 

3,218

 

673

 

902

RESULTS OF OPERATIONS IN the automotive division

Sales revenue in the Automotive Division rose by 3.9% year-on-year to €102.6 billion. This improvement was mainly due to the initial consolidation of Scania and the increased sales volume. As the cost of sales rose at a slower pace, at 3.8%, the gross margin remained improved slightly to 14.4% (14.3%). The gross profit was €14.7 billion (€14.1 billion). Distribution expenses rose to €10.1 billion because of the intensified marketing activities. Administrative expenses were higher than in the previous year, at €2.3 billion.

Net other operating income rose by €1.1 billion to €3.0 billion, primarily because of positive effects from currency hedging activities. In particular because of the traditionally high write-downs resulting from purchase price allocation in the initial phase following the acquisition, the inclusion of Scania made a negative contribution of €0.2 billion to the Volkswagen Group’s operating profit.

The Automotive Division generated an operating profit of €5.4 billion in the reporting period, an improvement of 4.5% on the previous year. The ratio of operating profit to sales revenue was unchanged at 5.3%.

The financial result decreased by €31 million to €249 million on account of effects from the measurement of financial instruments.

SEGMENT REPORTING – SHARE OF SALES REVENUE BY MARKET 2008
in percent
Segment reporting – Share of sales revenue by market 2008 in percent (bar chart)

RESULTS OF OPERATIONS in the financial services division

The Financial Services Division generated sales revenue of €11.2 billion in 2008, 10.2% more than in the previous year. This improvement was driven by the rental business and dealer and customer financing. At €2.5 billion, gross profit was up 11.0% year-on-year. Both distribution and administrative expenses remained on a level with the previous year at €491 million and €488 million respectively. Their respective proportions of sales revenue declined, however. Higher valuation adjustments on receivables meant that net other operating income was €292 million lower than in the previous year, at €–575 million. Although the financial crisis considerably impacted business development in the reporting period, the Financial Services Division achieved an operating profit of €905 million, only moderately lower than the high prior-year figure of €957 million. As a result, the division once again made a substantial contribution to consolidated profit.

The return on equity before tax was 12.1% (16.1%).

 

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