Shares of Volkswagen AG were gaining around 7 percent in German trading after the automaker reported Tuesday a surge in its fourth-quarter profit with higher sales revenue. Meanwhile, fiscal 2020 earnings and vehicles sales were weak amid the coronavirus pandemic.
Looking ahead for fiscal 2021, the company expects its business to recover significantly compared with the previous year. For subsequent years, the company aims to further improve its profitability, expecting to take operating return on sales back into the target corridor of 7 to 8 percent.
For fiscal 2021, the company projects delivery of 1 million electric vehicles. In 2020, the company more than tripled its sales of all-electric vehicles. The company further said it is planning to invest around 46 billion euros in electric mobility and the hybridization of its fleet in the next five years.
The company’s Board of Management and the Supervisory Board propose to the Annual General Meeting that a dividend of 4.0 billion euros be distributed from net retained profits of 2.4 billion euros.
Separately, Volkswagen said it is set to use platform model for issues of the future as it is stepping up the pace of its transformation into electric and fully connected vehicles. The company said vehicles and services of all Group brands, such as hardware, software, batteries and charging as well as mobility services, will be based on largely standardized technical foundations in the future.
Volkswagen is pursuing a platform strategy for batteries and charging. Starting in 2023, the company will introduce a unified cell, which will be installed in around 80 percent of all the its electric vehicles across brands by 2030.
With this, the company expects to reduce the cost of battery cells by up to 50 percent in the entry-level segment and by up to 30 percent in the volume segment.
Volkswagen and its partners plan to build six cell factories with a total capacity of 240 gigawatt hours in Europe by the end of the decade.
For the fourth quarter, profit after tax surged to 7.09 billion euros from 2.88 billion euros a year ago. Profit before tax surged to 9.41 billion euros from last year’s 3.72 billion euros.
Profit before tax before special items was 9.66 billion euros, compared to 4.80 billion euros a year ago.
Operating profit was 7.98 billion euros, higher than last year’s 3.42 billion euros.
Sales revenue for the quarter grew 2.1 percent to 67.40 billion euros from 66.02 billion euros a year ago.
In fiscal 2020, earnings after tax fell 37.1 percent from last year to 8.82 billion euros, and sales revenue declined 11.8 percent to 222.88 billion euros.
The company said its fiscal 2020 operating profit before special items of more than 10 billion euros was down 45 percent from last year, but significantly exceeded the expectations at the peak of the pandemic in spring 2020.
In the year, the company’s vehicle production declined 17.8 percent from last year to 8.9 million units, vehicle sales fell 16.4 percent to 9.16 million units, and deliveries to customers dropped 15.2 percent to 9.31 million units.
In Germany, Volkswagen shares were trading at 207.65 euros, up 6.6 percent.
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