Volkswagen Forecasts Slowed Revenue Growth

Volkswagen anticipates a slowdown in revenue growth for the upcoming year, facing challenges amidst a tough economic climate and increased competition. However, the company remains optimistic due to a series of planned product releases and more favorable cost trends that are expected to provide a positive push forward.

Revenue Growth Projection

The German carmaker foresees a revenue growth rate of up to 5% for the new year, a decrease from the 15% growth reported in the previous year. Additionally, the operating margin is expected to range between 7% and 7.5%, compared to the previous year's 7%.

Market Response

Following this announcement, shares experienced a decline, with prices dropping by 4.4% at EUR119.84. The initial reaction led to a decrease of up to 6% in share value shortly after the news was released.

Strategic Initiatives

Volkswagen has been actively implementing cost-saving initiatives and following through on a 10-point plan aimed at transitioning away from combustion-engine vehicles. The company stated that the groundwork for this transformation has been completed, setting the stage for progress in the upcoming years.

Chief Executive Oliver Blume affirmed, "The main course has been set for the restructuring of the Volkswagen Group. We can build on this in 2024 and have a solid basis for an accelerated ramp-up from 2025."

Future Investments

With a focus on key markets like China, Volkswagen plans to invest significantly in new products, its battery business, and platforms catering to both electric and combustion vehicles. Over the next five years (2025-2029), the company projects an investment of 170 billion euros ($183.71 billion).

This figure represents a reduction from the previously announced plan of EUR180 billion through 2027. Further details regarding this new investment strategy will be disclosed later this month.

Financial Performance Highlights

In the past year, the auto group reported an adjusted operating profit of EUR22.58 billion, with group sales revenue totaling EUR322.28 billion - surpassing analysts' expectations.

Moreover, Volkswagen will distribute dividends of EUR9 per ordinary share and EUR9.06 per preferred share, marking an increase from the previous year's values.

Financial Outlook

Anticipated net cash flow from the automotive division for 2024 ranges between EUR4.5 billion and EUR6.5 billion, with net divisional liquidity expected to fall within EUR39 billion to EUR41 billion.