Volkswagen Says 2016 Will Be No Less Challenging Than Last Year

(RTTNews) - Volkswagen AG (VKW.L, VLKAF.PK, VOW.BE) said that the current fiscal year 2016 will be no less challenging than the previous one. But it has made an encouraging start. In the first quarter, the Group achieved respectable results in a demanding market and competitive environment.

At the Annual General Meeting, Matthias Müller, the CEO of Volkswagen said, "the Board of Management and the Supervisory Board are proposing payment of a dividend of €0.11 per ordinary share and €0.17 per preferred share. We are fully aware that this fails to meet our and your expectations, and is extremely disappointing to many of you. But it remains our declared goal to allow you, our shareholders, to participate to a substantial degree in the success of the Company. The payout ratio is to be sustained at around 30 percent of net profit. We stand by this and will do our utmost to meet our commitment."

The company expects deliveries to customers in 2016 as a whole to remain more or less at the high level of the prior year overall, which translates into deliveries of around 10 million vehicles.

From a current perspective, Group sales revenue will fall below the figure for the previous year. Depending on economic conditions, particularly in South America and Russia, and exchange rate trends, and given the emissions issue, the decrease could be up to 5 percent. In terms of the Group's operating result, the company anticipates an operating return on sales of between 5.0 and 6.0 percent in 2016.

The Volkswagen Group is going to launch over 30 fully electric new vehicles by 2025. It expects that by then it will be selling about 2 to 3 million pure electric automobiles a year. It is stepping up its efforts accordingly and will launch a multi-billion euro investment program.

Müller noted that the company is aiming for a significant improvement in selling, general and administrative expenses, which have recently shown a sharp increase relative to sales revenue. Its long-term target is a reduction in the SG&A ratio to below 12 percent.

In total, based on these substantial efficiency gains, the company aims to realize the potential for a significant multi-billion euro increase in earnings in the next ten years relative to 2015.

The company plans to gradually dial up operating return on sales to between 7 and 8 percent by 2025.