Porsche beats everyone in the group again

Wolfsburg Porsche, Audi and the leasing division VW Financial Services have secured the comparatively good annual result for the Volkswagen Group for 2021 despite the ongoing lack of chips. As the car manufacturer announced on Tuesday, the three profitable group subsidiaries can transfer an amount in the double-digit billions to the coffers of the Wolfsburg headquarters.

Volkswagen had already presented the annual figures for 2021 for the entire group on Friday. Sales increased last year by twelve percent to 250 billion euros. The net result after tax is almost 15.5 billion euros, which corresponds to an increase of 75 percent. As a consequence, the shareholders can expect a significantly higher payment.

They are to receive a dividend of EUR 7.50 per common share and EUR 7.56 per preferred share, which is EUR 2.70 higher than in the previous year. At the same time, shareholders and the company benefit from a significant reduction in fixed costs. With a view to the Ukraine war, CEO Herbert Diess said the company had improved its resilience in recent years and would also overcome this crisis. “Volkswagen has demonstrated its resilience in recent years,” he emphasized.

Among the car brands, Porsche remains the Group’s most important source of income. No other Volkswagen subsidiary achieves an operating return of 16.5 percent (previous year: 15.4 percent). The Stuttgart sports car manufacturer had an operating income of five billion euros last year, in 2020 it was a billion less. Despite the lack of chips, Porsche was even able to increase its car sales by ten percent and sold more than 300,000 units for the first time.

So far, Porsche has managed to maintain its high profitability with the new electric models. The all-electric Taycan model plays a crucial part in this. The Stuttgart-based group was able to sell more than 40,000 of these in 2021, roughly double the figure for the previous year. Porsche will continue electrification in the future, with production of the electric SUV Macan starting in 2023.

Priority supply of semiconductors

The fact that Porsche again achieved a high return last year is also due to its priority in supplying semiconductors. The Volkswagen Group made sure that premium brands like Porsche got more chips in relative terms. Basically, last year all Group brands tried to sell more expensive models with better equipment if possible. The VW Group sold around 600,000 fewer vehicles in 2021 than in the previous year; nevertheless, the Wolfsburg-based car manufacturer managed to significantly increase earnings.

The premium subsidiary Audi also benefited last year from the fact that the supply of semiconductors remained reasonably reliable. The Ingolstadt car manufacturer has increased its operating profit from 2.7 to 5.5 billion euros, the operating return has almost doubled from 5.5 to 10.5 percent. As in the previous year, the premium subsidiary was again able to sell around 1.7 million vehicles in 2021. Audi has recovered significantly from the diesel crisis and is thus becoming a strong source of income for the entire group.

In terms of returns, the classic volume brands then fall significantly behind compared to Porsche and Audi – also because they were not primarily supplied with semiconductors in the past year. The core brand Volkswagen Passenger Cars was hit particularly hard, with global sales falling by eight percent to 4.9 million vehicles in 2021.

The significantly lower sales figures then lead to low returns and a correspondingly weaker operating income for VW passenger cars. The return is 3.3 percent (previous year: 0.6), the profit from the operating business at 2.5 billion euros (0.5).

Nevertheless, the core brand has had some successes over the past year. “We have achieved important turnarounds in North and South America,” said VW CFO Arno Antlitz. In both regions, Volkswagen is back in the black for the first time after many years of heavy losses. The company had lost billions in both regions of America. The upward trend should continue in 2022, Volkswagen is hoping for a few hundred million in earnings.

Skoda achieves operating income of one billion

Business for the Czech subsidiary Skoda was somewhat better than for the core brand VW passenger cars last year. The car manufacturer from the industrial city of Mlada Boleslav north of Prague has achieved an operating income of one billion euros (previous year: 0.7 billion), the return has increased from 4.4 to 6.1 percent. Seat in Spain, on the other hand, is in the red again, with a loss of a good 200 million euros for the past year.

A very extraordinary year lies behind the finance and leasing division VW Financial Services. The Braunschweig subsidiary has doubled its operating profit from three to six billion euros, and the return went up from 7.4 to 13.8 percent.

New cars have become scarce worldwide due to a lack of semiconductors, which means that interest in used vehicles is growing. Financial subsidiaries such as VW Financial Services benefit greatly from this, because they can book much higher residual values ​​for leasing returns than were originally on the balance sheet. Volkswagen itself does not believe that the financial subsidiary can continue this extraordinary development in the current year.

However, things are less successful for Volkswagen in China, which is actually the Group’s most important market. VW and the other subsidiary brands sell almost 40 percent of all their vehicles there. The operating result of the joint venture companies in China fell by 17 percent to 3.0 billion euros. The reason for this was also the lack of semiconductors.

But Volkswagen also has a structural problem in China: the new electric cars are no longer selling as well there as the previous portfolio of vehicles with combustion engines. In addition, the yields there have been declining for years. In the years 2014/15, the group had achieved an operating profit of 5.2 billion euros in the People’s Republic. Since then it has gone down continuously: it was 4.4 billion euros in 2019, 3.6 billion in the first Corona year 2020.

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