Volkswagen hits the gas on 2012 revenues

The German carmaker reckons that it's a smooth road ahead in 2012, despite a poor fourth quarter showing.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013

In the final three months of 2011, Volkswagen made €2.16bn in profit, down from a whopping €3.2bn over the same period in 2010. Europe’s financial woes are to blame, says the company, although rivals Nissan and Jaguar Land Rover have managed just fine – the former up 5.5% in the last quarter despite the effects of the tsunami, the latter up a tyre-burning 37%.  Fellow Teuton BMW, however, saw a 12% drop as its investment in new models ate into earnings.

Looking at the whole of 2011, though, Volkswagen is sitting pretty: earnings still come in at more than double the previous year’s figures: it trousered €15.41bn for the whole of 2011. Revenues were up 26% to €159.34bn.

How did earnings stay high when performance dipped? Volkswagen’s stalled takeover of sports car manufacturer Porsche kept the profit tank topped up; the provisions put aside to fund the acquisition were stacked onto the company’s bottom line. But the deal, (which started when Porsche failed in a reverse takeover of VW back in 2008) has now gone through. Volkswagen has snagged a 49.9% stake in Porsche for around €3.9bn with an option to buy the remaining 51% should Porsche’s board decide they wish to flog the whole entity. This could hit the first quarter of 2012...

The Porsche plot thickens. Volkswagen chairman Ferdinand Piech is looking to install his wife, kindergarten teacher Ursula, as CEO of the sports car brand. The move would increase the number of Piech family members on the 20-person Porsche board to five, cementing the family’s control of the business. MT stifles cries of ‘nepotism’ and ‘self-interest’.

It seems that the Piechs have the German auto industry all sewn up. They own the majority of VW’s voting shares too. ‘VW has in essence become an Austrian family-run company,’ says Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. ‘It’s the family that makes the decisions. It’s unusual in a publicly listed company.’

It’s clear why the Austrian clan want to hang on to this nest egg. The firm sold nearly 8.3 million vehicles last year, a 14.7% rise from the previous year's 7.2 million. The sky-high production figures put Volkswagen ahead of Toyota in the industry ranking last year: Volkswagen is now the world's second biggest car company by total deliveries behind General Motors.

And the company is confident that it will continue to thrive into 2012. Volkswagen expects to increase deliveries again, with the help of a few new models rolling off the production line. It also anticipates strong sales of the SEAT, Bentley, Lamborghini, and Skoda brands – although it gave no hard revenue forecasts.

In profit terms, Volkswagen says its goal for 2012 is to match last year's €11.27bn in operating profit. So long as it continues to perform well in the emerging markets, that's probably doable. But the market voiced its skepticism across the green and black screens this morning: Volkswagen shares have dropped 0.9 percent lower to €141.50 in Frankfurt trading. Although the fall could be down to news that VW's chief exec, Martin Winterkorn, now takes home €17.5m a year up from €9.3m. And we think Bob Diamond's overpaid...

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