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Volkswagen reports 'very successful year' as coronavirus clouds 2020 outlook

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
04 November 2019, Saxony, Zwickau: Herbert Diess, Chairman of the Board of Management of Volkswagen, at a ceremony marking the start of production of the ID3 electric car. Photo: Sebastian Willnow/picture alliance via Getty Images.

Volkswagen (VOW3.DE) chief executive Herbert Diess said on Tuesday morning (17 March) that 2019 was a “very successful year for the Volkswagen Group.”

During the annual press conference, which was livestreamed due to coronavirus, the world’s largest carmaker said the group was able to substantially increase its sales revenue and market share for an “unprecedented level of earnings.”

Before presenting the 2019 figures, Diess said that production is to be suspended at its Spanish, Portuguese, Italian, and Slovakian plants by the end of this week, as the coronavirus pandemic in Europe breaks down supply chains. Most of the rest of its EU plants will halt production next week.

On the other hand, production has largely been resumed in China. “In China, our most important market, the situation has stabilised,” Diess said. “The crisis in the European Union and worldwide has yet to come. We can fall back on what we learned in China in terms of hygiene and operational measures.”

READ MORE: Carmakers shut plants in Europe as coronavirus hobbles supply chains and dents demand

Volkswagen Group operating profit in 2019 rose 12.8% from the previous year to €19.3bn (£17.5bn, $21.5bn). Sales revenue was up 7.1% from the previous year to €252.6bn.

“The corona pandemic presents us with unknown operational and financial challenges,” Diess said ahead of the annual press conference today.

That uncertainty was echoed by his CFO Frank Witter, who said: “It is almost impossible to make a reliable forecast at the moment.”

“We are in task-force mode and leveraging all measures to keep our employees and their families safe, and protect our business,” Witter added.

However, the carmaker expects to deliver the same amount of cars in 2020 as it did last year — 10.98 million units — and is targeting an operating profit margin before special items of between 6.5% and 7.5% in 2020, similar to 7.6% in 2019.

The core Volkswagen brand, which is the largest division in the group, saw the most improvement in terms of absolute profit last year, Diess said, adding that its luxury Bentley brand is back in the black after two years of losses, and Porsche posted the highest returns of the group

Preparations for the ID.4, the company’s first fully-electric SUV, are “in full swing” and will be produced in the company’s Chattanooga plant in the US.

The ongoing repercussions of the diesel emissions scandal cost the company €1.9 billion last year. “We are able to reach settlements in Canada, Chile and Germany among other countries,” Diess said. “We have upgraded more than 7.5 million vehicles worldwide.”