Value contribution and return on investment in the current fiscal year

To maintain comparability with 2007, we initially calculated the 2008 figures for value-based management excluding the consolidation of Scania. The operating profit after tax of the Automotive Division (excluding Scania) was €4,185 million (€3,567 million) in fiscal year 2008. The year-on-year improvement is attributable in particular to sales growth and to the further optimization of our revenue and cost structures.

Invested capital rose by an annual average of €1,207 million in connection with the renewal and expansion of our product portfolio plus a temporary increase in inventories. As the cost of capital has fallen, the cost of invested capital remained at the previous year’s level at €2,787 million. The 17.3% increase in operating profit after tax once again resulted in a positive value contribution of €1,398 million (€717 million).

The return on investment is the return on invested capital for a particular period based on the operating profit after tax. This also improved year-on-year to 10.8% (9.5%).

As a result, we also clearly exceeded our minimum required rate of return of 9% in 2008.

After the Volkswagen Group increased its share of voting rights in Scania to 68.6% on July 22, 2008, Scania was consolidated as the Group’s ninth brand. In line with the internal management and control of the brands and companies in the Automotive Division, Scania and its core operations (development, production and sale of commercial vehicles and buses) were included in the concept of value-based management on the basis of uniform definitions. The effects of purchase price allocation on assets and earnings are not taken into account as they lie outside the scope of operational management.

Including Scania’s earnings and assets from July 22 to December 31, 2008, the return on investment was 10.9% and the value contribution was €1,519 million.

More information on value-based management is contained in our publication “Financial Control System of the Volkswagen Group”, which can be downloaded from our Investor Relations website.

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VALUE CONTRIBUTION BY THE AUTOMOTIVE DIVISION*

 

 

 

 

 

 

2008

 

2008

 

2007

€ million

 

incl. Scania

 

excl. Scania

 

 

*

Including proportionate inclusion of vehicle-producing Chinese joint venture companies and allocation of consolidation adjustments between the Automotive and Financial Services divisions.

Operating profit (starting point)

 

5,428

 

5,428

 

5,194

Adjustment for operating profit from Scania’s core business

 

 

–406

 

Adjustment for effects of Scania purchase price allocation

 

575

 

575

 

Plus share of operating profit of vehicle-producing Chinese joint ventures

 

381

 

381

 

294

Tax expense

 

–1,915

 

–1,793

 

–1,921

Operating profit after tax

 

4,469

 

4,185

 

3,567

Invested capital (average)

 

40,966

 

38,707

 

37,500

Return on investment (ROI) in %

 

10.9

 

10.8

 

9.5

Cost of capital in %

 

7.2

 

7.2

 

7.6

Cost of invested capital

 

2,950

 

2,787

 

2,850

Value contribution

 

1,519

 

1,398

 

717

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