The Volkswagen Group posted solid operating results in the first half of the year, enabling significant investments in future profit groups and new platforms. The group continued to make strong strategic progress in the second quarter, registering crucial developments in its technology platforms: mobility services, batteries and software.
“Despite unprecedented global challenges, Volkswagen has demonstrated remarkable financial robustness. The operating margin for the first half of the year reflects strong product substance and proportionally higher sales in the premium segment. In addition, the group of volume has shown that it can deliver good results even in a challenging environment,” said CFO Arno Antlitz on the occasion of the presentation of the quarterly figures.
Demand for BEVs continued to grow rapidly in the second quarter, with order intake in Western Europe in the first half of 2022 up 40 percent from the previous year’s level. Despite supply bottlenecks, a temporary production shutdown in Europe and Covid-related lockdowns in China, 118,000 BEVs were delivered in the second quarter, reflecting a 6 percent share of total deliveries . During the first half of the year, BEV deliveries rose 27 percent to 217,000 vehicles. Volkswagen added production capabilities for the ID.4 in Emden, Chattanooga and for the ID. Buzz in Hannover in the second quarter to support the expected increase in global BEV production in the second half of the year and beyond.
Despite global headwinds and supply chain issues, the group demonstrated financial resilience in the second quarter. Sales revenue for the quarter was 69.5 billion euros (an increase of 3.3% compared to 2021). Operating profit before special items in Q2 was 4.7 billion euros and included approximately 2.4 billion euros of negative effects of the fair value of derivatives outside of hedge accounting (mainly material hedging first), an inverse effect compared to the first quarter. Before these losses in book value, the underlying yield even improved for a good quarter in 2022.
Operating profit before special items for the first half amounted to €13.2 billion, up 16.1% from the first half of 2021. This was driven by the strong results of the Premium and Sport brand groups, as well as the improvements in the volume group, which achieved a margin of 5.0% during the first half. , further underscoring the strength of Volkswagen’s business. In China, the monthly production pace picked up markedly towards the end of the second quarter, positioning the group well for the rest of the year as Covid restrictions continue to ease. The region represents the Group’s second largest BEV market (29 percent of sales in Q1 and Q2) and the main driver of growth in BEV deliveries, registering a more than three-fold increase from 2021 to 63,500 BEVs delivered in the first half of 2022.
The Group continued to prioritize investment in future BEV technology and software. R&D spending rose to 4.9 billion euros in the second quarter, accelerating Volkswagen’s progress toward becoming a software-driven mobility provider.
“The strong operating profit and financial position of the group allows for significant investments in future profit groups,” Antlitz said. “Volkswagen also made significant strategic progress in the second quarter and significantly advanced the development of its battery, mobility services and software platforms.”
Advancing Volkswagen as one of the leading companies in mobility services
The acquisition of Europcar represents an important strategic step with which Volkswagen is expanding its mobility services business, taking advantage of a growing market with customer demand that is expected to increase rapidly. Future benefit pools are very promising. As a result, Volkswagen will be able to offer access to all its customers through Europcar’s infrastructure, including key transfer points at airports, train stations and city center locations, from which it can extend its services to mobility
Volkswagen plans to offer its customers all their mobility needs from a single app, including ride-hailing, car pooling, car sharing, rental and vehicle subscriptions.
The new PowerCo paves the way for the expansion of battery production
Salzgitter-based PowerCo, which was formally established in July, brings together global battery activities from raw materials to recycling.
At the same time, construction work began on the company’s first own cell factory. This will provide a highly standardized blueprint for Volkswagen’s global rollout of sustainable cell factories designed to secure supply and reduce battery costs for the Volkswagen Group.
CARIAD releases new software updates
CARIAD made significant progress in the second quarter, expanding its automated driving capabilities and offering powerful updates to its customers that provide a significantly improved level of automation and add new functionality, such as automatic lane change with Travel Assist, parking automated and Plug & Charge.
CARIAD also signed several agreements to secure high-performance hardware for the Group’s software platform and to future-proof the next generation of vehicles.
perspective
The Volkswagen Group confirms its outlook for 2022 after a solid first half as supply constraints ease. Wiring harness supplies have been successfully managed and are mostly back to normal levels. The Group expects the product mix to normalize in the second half as the semiconductor situation improves in combination with a strong order book. A notable recovery in monthly sales towards the end of the second quarter also bodes well for sales in the second quarter.
However, it is not yet possible to conclusively assess the specific effects of the war in Ukraine or the effects of the Covid-19 pandemic on the business of the Volkswagen Group, on the global economy and on industry growth during fiscal year 2022. In Europe, in particular, there are uncertainties regarding energy supply.
“Despite all caution in the face of the volatile market environment and geopolitical risks, we are confident that we can further accelerate the group’s transformation,” concluded CFO Antlitz.
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