|
 Europe's biggest motor manufacturer, battling to rebuild its
reputation after admitting to cheating U.S diesel emissions tests in
September, said cost cutting and encouraging sales in China and
Europe should help it deliver a solid operating performance this
year.
But it warned of challenges ahead, as it strives to make big savings
at its underperforming VW brand in the face of union opposition and
reform a highly centralized company structure blamed for lax
controls and delays to new models.
The emissions scandal inevitably casts a long shadow.
While Volkswagen struck a deal last week to buy back or fix affected
vehicles in the United States and settle some legal disputes there,
it still faces U.S. Justice Department fines as part of an expected
civil settlement and an ongoing Justice Department investigation
that could lead to criminal charges.
In its annual report published on Thursday, Volkswagen said it could
face "further significant financial liabilities" and that "the
funding needed to cover the risks may lead to assets having to be
sold," without elaborating.
Analysts have previously speculated Volkswagen might sell its trucks
business to raise funds, but Chief Executive Matthias Mueller told
reporters that wasn't under consideration for now.
Finance chief Frank Witter added there were no plans to sell any of
the company's brands or businesses and it believed it had made
adequate provisions to cover legal and regulatory costs.
"We believe in our multi-brand company, and in the strength of our
business model, so we do not have asset sales on the agenda," he
told a press conference to discuss 2015 results. "But we are of
course thinking about 'what if' and in that sense we are preparing
ourselves."
Investors are also awaiting the results of an investigation by U.S.
law firm Jones Day into who was responsible for, and who knew about,
the emissions test cheating.
VW BRAND
Volkswagen said last week the costs of the crisis drove it to a
record loss last year and it was slashing its dividend.
Detailed results on Thursday showed its mass-market VW brand bore
the brunt of the scandal, while upmarket brands Audi and in
particular Porsche continued to fare well.
[to top of second column] |
The VW brand, which includes the Golf and Passat and is the group's
largest by revenue, plunged to a 127-million-euro loss in the last
three months of 2015, compared with a 780-million-euro profit in the
same period of 2014. The company cited weak markets in Russia and
Brazil as a contributory factor.
The VW brand is in the midst of a 5-billion-euro cost-cutting drive,
and the company said on Thursday it expected margins at the brand to
improve sharply to 5.5-6.5 percent this year after falling to just 2
percent in 2015.
UBS analysts said reviving the VW brand could be a key driver for
Volkswagen's shares, which are still down around 20 percent since
the emissions scandal broke. They have a "buy" rating on the stock,
which was down 0.4 percent at 1135 GMT.
But the company faces a battle to cut costs with its powerful trade
unions, which occupy about half the seats on its supervisory board.
Mueller said on Thursday Volkswagen was still aiming to keep its
core workforce, without elaborating.
The company said an improved business structure and increased
efficiencies across its 12 brands would be fully in place by the
start of 2017, with a business strategy spelling out targets and
priorities through 2025 to be published in June.
The company plans in particular to step up development of electric
vehicles and digital services. Mueller said he was in talks with
third parties over starting a new digital business, but declined to
provide details, other than saying the talks did not involve either
Apple or Google.
Volkswagen also said long-term savings from the closer collaboration
of its MAN and Scania truck brands were now expected to be as much
as 1 billion euros, up from 850 million previously.
(Writing by Mark Potter; Editing by Keith Weir)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
