VW posts US$12.2b profit in resilient pandemic year

[WOLFSBURG] Volkswagen said a robust sales recovery in the second half of last year led to strong annual earnings despite fallout from the Covid-19 pandemic.

Operating profit before special items related to the diesel-emissions scandal fell to around 10 billion euros (S$16.1 billion) last year, VW said in a statement Friday, from 19.3 billion euros in 2019. Automotive net cash flow shrunk almost in half to about 6 billion euros.

Robust demand in China, VW's largest market, helped the German manufacturer rebound from the coronavirus outbreak forcing the most widespread shutdown of global car production since World War II. Worldwide vehicle deliveries fell 15 per cent to 9.3 million vehicles, but the group gained a small amount of market share as some peers were hit even harder.

The automaker will report detailed full-year earnings and provide guidance for 2021 at the end of next month.

VW said in November it expects a "transition year" as the pandemic continues to weigh on operations and warned it might not return to pre-crisis financial planning before 2022. The company stuck to its mid-term financial targets for 2025.

Chief executive officer Herbert Diess is making an aggressive push into electric cars to challenge Tesla which became the world's most valuable auto manufacturer by far last year. The namesake VW brand will roll out the ID.4 compact sport-utility vehicle, and the group's Porsche and Audi luxury brands will expand offerings of their Taycan and e-tron model lines.

"We argue that in 2021, VW will rival Tesla as the No 1 seller of battery-electric vehicles globally," Timm Schulze-Melander, an auto-industry specialist at Redburn, said in a note Friday. He estimates the group will ship as many as 800,000 fully electric cars to customers, up from 231,000 last year. Tesla narrowly missed its target of 500,000 global deliveries in 2020.

BLOOMBERG