Volkswagen Group: Excellence has many names Christine Ritz Head of Group Investor Relations, Volkswagen Aktiengesellschaft Deutsche Bank: German, Swiss & Austrian Conference, Frankfurt, 15/16 May 2012 Disclaimer
This presentation contains forward-looking statements and information on the business development of the Volkswagen Group. These statements may be spoken or written and can be recognized by terms such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words with similar meaning. These statements are based on assumptions relating to the development of the economies of individual countries, and in particular of the automotive industry, which we have made on the basis of the information available to us and which we consider to be realistic at the time of going to press. The estimates given involve a degree of risk, and the actual developments may differ from those forecast.
Consequently, any unexpected fall in demand or economic stagnation in our key sales markets, such as in Western Europe (and especially Germany) or in the USA, Brazil or China, will have a corresponding impact on the development of our business. The same applies in the event of a significant shift in current exchange rates relative to the US dollar, sterling, yen, Brazilian real, Chinese rinminbi and Czech koruna.
If any of these or other risks occur, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such statements.
We do not update forward-looking statements retrospectively. Such statements are valid on the date of publication and can be superceded.
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2 Successful start to 2012 – Headline Q1 figures January to March 2012 vs. 2011
Sales revenue Operating profit Profit before tax Profit after tax Automotive net liquidity € million € million € million € million € million
+26.3% -7.0% +10.2% +93.4% +86.1% 16,9511) 47,326 15,762 3,209 4,300 3,186 37,470 2,912
2,223 1,712
2011 2012 2011 2012 2011 2012 2011 2012 20111) 2012
1) As per 31 December 2011 3 Volkswagen Group – Analysis by Business Line1) January – March 2012
Vehicle sales Sales revenue Operating result thousand vehicles/ € million 2012 2011 2012 2011 2012 2011 Volkswagen Passenger Cars 1,177 1,077 26,137 23,042 1,116 1,060 Audi 340 374 12,389 10,514 1,412 1,115 ŠKODA 206 181 2,916 2,691 209 187 SEAT 99 93 1,579 1,382 -29 -12 Bentley 2 1 357 197 15 -25 Volkswagen Commercial Vehicles 119 108 2,486 2,145 124 92 Scania2) 16 19 2,363 2,414 262 376 MAN 2) 35 - 3,896 - 223 - VW China3) 588 512 5) 5) Other4) -323 -335 -9,118 -8,589 -434 -169 Volkswagen Financial Services 4,320 3,674 311 287 Volkswagen Group 2,260 2,031 47,326 37,470 3,209 2,912 Automotive Division 2,260 2,031 42,630 33,552 2,866 2,608 of which: Passenger Cars and LCV 2,208 2,012 36,497 31,208 2,818 2,315 of which: Trucks and Busses, Power Engineering 51 19 6,133 2,345 48 292 Financial Services Division 4,695 3,918 343 304
1) All figures shown are rounded, so minor discrepancies may arise from addition of these amounts. 2) Including financial services; MAN since November 9, 2011. 3) The sales revenue and operating profit of the joint venture companies in China are not included in the figures for the Group. The Chinese companies are accounted for using the equity method and recorded an operating profit (proportionate) of €848 million (€557 million). 4) Including Porsche Holding Salzburg as from March 1, 2011. 5) Mainly intragroup items recognized in profit or loss, in particular from the elimination of intercompany profits; the figure includes depreciation and amortization of identifiable assets as part of the purchase price allocation for Scania, Porsche Holding Salzburg (from March 2011) and MAN (from November 2011). 4 Cash flows from operating activities and cash flows from investing activities
January – March 2011 January – March 2012
€ billion, Automotive Division1)
6.0 5.1
4.5 2)
4.0 2.9 2) 2.5
2.0 2.1 1.3
Cash flows from Cash flows from Cash flows from Cash flows from operating activities investing activities operating activities investing activities
1) Including allocation of consolidation adjustments between Automotive and Financial Services divisions. 2) Excluding acquisition and disposal of equity investments: January – March €2,112 million (€1,251 million). 5 World car market vs. Volkswagen Group deliveries to customers1) (in comparison to previous year)
2011 2012
Q1 Q2 Q3 Q4 Year 2011 Q1 April 20%
15.4% 14.4% 14.3% 13.7% 13.6%
10% 9.6% 8.5% 6.9% 6.0% 4.5% 5.0% 4.8% 3.9% 3.5%
0% World car market VW Group (deliveries to customers)1)
1) excl. Scania and MAN 6 World car markets and Volkswagen Group deliveries to customers1) January to April 2012 vs. 2011
World: Car market: 6.4% Volkswagen Group: 8.6%
North America Western Europe Central & Eastern Europe Car market VW Group Car market VW Group Car market VW Group Cars + LCV 32.0% 23.0%
9.8% 11.1%
-2.0% -8.0%
South America Rest of World Asia Pacific
Car market VW Group Car market VW Group Car market VW Group
16.5% 14.3% 13.5% 0.8% 0.5% 4.2%
1) Excl. Scania and MAN 7 Volkswagen Group – deliveries to customers by brands1) January to April 2012 vs. 2011
´000 units January to April 2011 1) +9.8%+9,8% January to April 2012 3.500
2,941 3.000 2,679 +9,4%+9.4% 2.500
2.000 1,812 1,655 1.500
+11.7%+11,7% +9.8%+9,8% -13,3%-13.3% 1.000 +43.4%+43,4% +6,1%+6.1% 471 500 422 295 324 121 105 164 174 2 2 0 Volkswagen Volkswagen Audi ŠKODA SEAT Bentley VW Commercial Group Passenger Cars Vehicles
1) Incl. Scania (Jan – Mar) and MAN (Jan – Mar 2012, since 9th November 2011); 8.6% excl. Scania and MAN 8 Volkswagen Group – Truck and Bus deliveries1) January to March 2012 vs. 2011
January to March 2011 January to March 2012 -0.8% '000 units -0.8%
1) -14.8%-14.8% 35 35
19 16
Scania MAN
1) MAN is fully consolidated in the Volkswagen Group since 9 November 2011. Delivery figures for the period January – March 2011 are shown for information only. 9 Outlook 2012 – Volkswagen Group1)
8.3 Deliveries to 7.2 customers 6.2 6.3 ■ Deliveries to customers are expected to million vehicles increase year-on-year ■ Sales revenue will exceed the prior-year figure 159.3 ■ 2012 will be dominated by the start of 126.9 Sales 113.8 production for new, high-volume models and 105.2 revenue the need to convert our plant and equipment € billion for use with the Modular Transverse Toolkit ■ The earnings contribution of MAN SE will be limited because of the write-downs that will 11.3 be required for purchase price allocation
Operating 7.1 ■ Our goal for operating profit in 2012 is to profit 6.3 match the 2011 level € billion 1.9
2008 2009 2010 2011 2012
1) Incl. Trucks & Busses (until February 2009); incl. MAN from 9 November 2011 10 Volkswagen Group Strategy 2018 Sustainable growth combined with sustainable profitability
1 Growth market focus • Increased market penetration • Emerging markets expansion • Balanced global footprint 6 Potential upside 2 Modular toolkit strategy
• Product portfolio extension • Reduction in investment, Leading • North American expansion and development and unit costs in customer market recovery satisfaction • Scale and efficiency effects • Commercial vehicle strategy and quality • Increased production flexibility and market recovery Volkswagen • Reduced time to market Group profit • Financial Services: strengthen Top employer the automotive value chain before tax margin > 8% 3 Capital discipline Volumes 5 Synergy potential > 10 million • > 16% RoI target in units p.a.2 automotive business • Leveraging best practices • 20% RoE1 goal in across the Group Financial Services • Purchasing, production, and • Around 6% automotive capex distribution benefits 4 Operating profit measures in PPE/sales • Strong cost control • Process/product optimization • Regional scale effects
Source: Volkswagen Group 1 Normalized RoE based on 8% equity ratio Note: All stated Volkswagen Group figures represent financial targets for 2018, excluding Porsche and MAN 2 Including China 11 Strategy 2018 – Our achievements so far
Volkswagen Group customer satisfaction (on a scale of 1 to 101)
8.55 8.41 8.22 8.32 8.34
2007 2008 2009 2010 2011
„I am happy to work at the Volkswagen Group“ Leading Group profit before tax margin (Employee opinion survey) in customer 11.9 91% (in percent) satisfaction 89% 89% and quality 7.83 Volkswagen 7.1 Group profit 6.0 5.8 Top employer 85% before tax margin > 8% Volumes 1.2 > 10 million 2 2007/2008 2009 2010 2011 units p.a. 2007 2008 2009 2010 2011
8.27 Group deliveries (in million units) 7.20 Note: Status as of 12 March 2012 1 Own calculation based on key industry studies on customer satisfaction with dealers, after sales and new vehicles. 6.19 6.26 6.34 2 Including China 3 Group profit before tax margin excluding the nonrecurring effect from the remeasurement 2007 2008 2009 2010 2011 of the Porsche put/call options.
12 Substantial growth opportunities in key sales markets Market growth 2011 – 2018 (million units) +8% bf +48% 6.0 4.6 +10% 4.7 4.4 +27% 4.0 15.8 4.1 19.3 14.9 18.4 14.4 15.3 2011 2014 2018 Eastern Europe 2011 2014 2018 2011 2014 2018 (incl. Russia) Japan 2011 2014 2018 Western Europe2 +91% North America 5.7 +65% 29.2 4.1 23.5 3.0 17.6
+51% 8.4 +36% 2011 2014 2018 6.5 103 2011 2014 2018 5.5 89 76 India China (incl. HK)
2011 2014 2018 1 South America 2011 2014 2018 World 1 Includes Central America and Caribbean 2 Includes Cyprus and Malta Source: IHS Global Insight (data status: April 2012), rounded Note: Market = Cars and LCVs; figures for 2011 are partly preliminary 13 Substantial growth opportunities in key sales markets (Trucks)
Market growth 2011 – 2018 (´000 units) +94% +44% Gvw. >6t 273.5 +32% 228.4 +51% 347.9 76.7 76.6 288.4 140.9 203.8 262.7 173.1 53.3 36.6 38.5 575.1 110.3 24.6 509.8 272.8 223.4 69.7 206.5 30.6 55.3 40.1 38.1 381.4 294.1 28.7 279.1 2011 2014 2018 219.3 56.2 65.0 75.1 2011 2014 2018 Eastern Europe 230.7 281.0 162.1 2011 2014 2018 (incl. Russia) Japan Western Europe2 2011 2014 2018 +52% North America1 +70% 481.0 2,003.1 413.1 1,496.0 1,177.0 316.3 338.2 1,073.6 1,412.5 +54% 303.5 884.4 +10% 236.7 292.6 422.4 590.6 4,293.6 244.4 79.6 109.6 142.8 2011 2014 2018 222.7 230.2 3,504.8 China 157.4 2,793.3 2011 2014 2018 149.6 144.2 2,828.2 (incl. HK) 2,331.1 India 1,935.8 73.1 86.0 87.0 1,173.7 1,465.4 2011 2014 2018 857.5 South America 2011 2014 2018 Heavy Trucks (gvw. > 15 t) 1 includes Central America World 2 excludes Cyprus and Malta Medium Trucks (6 t < gvw. ≤ 15 t) Source: IHS Global Insight (data status: April 2012), LMC Automotive, excluding Buses
14 Balanced production and deliveries split with segment exposure improving1
Regional derivatives closer to customer needs Minimising import tariffs through localisation High localisation rate Reducing currency exposure
Deliveries Production Segments
2% 2% 14% 12% 16% 12% 50% 48% 15% 3% 17% 2007 2007 2007 6% 9% • Western Europe 30% 39% • Station wagon • Central & Eastern Europe 8% 17% • Hatchback North America Sedan Asia-Pacific 4% 2% SUV 11% 14% 10% South America 11% 38% 40% 9% Other Rest of World 2011 27% 2011 2011 32% 33%
7% 7% 13% 34% 8%
1) Excl. Trucks 15 Strong profitability in China Expanding local capacity and model portfolio
Expanding activities to Southern and Western China Operating profit (proportionate): €2.6 bn Jan-Dec 2011 (€1.9 bn Jan-Dec 2010) Local production of €0.8 bn Jan-Mar 2012 (€0.6 bn Jan-Mar 2011) the New Lavida Investments 2012-2016: €14 bn, fully self funded Market Development
[million units] 29.2 23.5 17.6
Headquarters +65% Existing car plant New car plant / expanding capacity Total Deliveries1 (‘000 units) Volkswagen Audi ŠKODA 2011 2014 2018 Jan-Dec 2011: 2,259 (+17%) 1,723 (+14%) 313 (+37%) 220 (+22%) Jan-Apr 2012: 859 (+16%) 653 (+13%) 124 (+41%) 80 (+7%)
1All figures shown are rounded, so minor discrepancies may arise from addition of these amounts. Figures exclude Trucks. Source: Volkswagen Group China 16 Creating profitable growth through targeted models, locally sourced and locally produced
US deliveries 2011 (2010) in ‘000 units: Volkswagen Group of America Group: 444 (360) Thereof Volkswagen: 324 (257); Audi 118 (102) Deliveries in million units 1.0 US deliveries Jan-Apr 2012 (Jan-Apr 2011) in ‘000 units: Group: 174 (132) Market share in %: Thereof Volkswagen: 132 (96); Audi 41 (35) 2007: 2 2011: 4 2018: Target >6 0.8 Herndon Headquarters 0.4 VW Chattanooga Plant Silao Plant (SOP 2013) 0.3 0.3 Puebla Plant + Audi Plant (SOP 2016, 0.2 VW location still to be selected) VW 0.2 0.1 0.1 Audi Audi Audi 2007 2011 Target 2018
17 Broad product and segment mix highlights opportunity to capture profitable growth across all passenger car segments (world 2012)
Hatchback Saloon Estate MPV SUV Coupé Convertible Roadster City Van Pick-Up
E
D 1 11
C 1
B 1 1
A
A0
A00
149.9% stake since 7 December 2009 Product launch in 2012
18 MQB Toolkit: Driving forward significant economies of scale in unit cost and investment
MQB1
Start: 2012
… A3 Golf SEAT ŠKODA Leon Octavia MQB provides substantial efficiency gains Toolkit affords Reduction of unit costs Flexibility in length, height, width Lower one-off expenditure Significant economies of scale Less engineered hours per vehicle Regional variations Significant weight and emission reduction Opportunity for low volume niche models Alternative powertrain concepts 1 MQB: Modularer Querbaukasten/ modular transversal toolkit
19 Driving the future – On the way to E-Mobility
2010 2011 2012 2013 2014/2015
VW Jetta VW Passat VW Touareg Audi Q5 VW XL1
Audi A6 Audi A4 Hybrid
Porsche* Cayenne S Porsche* Panamera S Porsche 918 Spyder
Audi A8 Audi Q7
VW up! blue-e-motion Audi R8 e-tron
VW Golf blue-e-motion E-vehicles
* 49.9% stake since December 2009 VW Caddy blue-e-motion
20 VW Financial Services1): A global, well diversified and successful business
Strong global presence Continuous portfolio expansion
(‘000 contracts) 2,691 2,148 2,246 1,964 Existing 1,926 2,169 Total 1,623 markets 1,508 1,524 portfolio 1,505 Focus 1,256 1,336 8,245 markets 3,930 Start / 3,155 3,097 3,163 3,567 3,712 market entry
2006 2007 2008 2009 2010 2011 Financing Leasing Insurance / Services
Diversified funding structure Marked growth of customer deposits
23.8 Equity, liabilities to Asset backed securitization (in € bn) 14% affiliated companies, 19.5 20.1 other 29% 12.8 2011: 8.7 8.8 9.6 € 97.5 bn 7.1 8.0 5.6 33% 4.5 3.4 Bonds, Commercial Paper, 24% liabilities to financial Customer deposits institutions
1) VW Financial Services does not include FS of MAN, Scania and Porsche Holding Salzburg 21 Volkswagen Financial Services AG: Strong benefit to automotive operations through captive financing
48% more equipment 25% faster vehicle turnover 10% higher brand loyalty
Holding period (years) Cash payer Captive customer
67% 148% 7.8 61% 100% 5.8 39% 33%
Cash payer Captive customer Cash payer Captive customer Switch to competitor Stay loyal
22 Integrated Automotive Group with Porsche – Multi-stage transaction to ensure stable rating
Transaction steps Timeline
• Signing of comprehensive agreement Phase 1 – 2009 • Resolution of risk of Porsche SE’s option portfolio of shares in Volkswagen Signing of implementation and loan • Restructuring of financing of Porsche SE and Porsche AG agreements; • Signing and notarisation of detailed implementation agreements partial transfer of PAG • Acquisition of a 49.9% stake in Porsche Zwischenholding GmbH by Volkswagen
• Capital increase at Volkswagen (preferred shares) Phase 2 – 2010 / 2011 Capital raising and • Acquisition of Porsche Holding Salzburg acquisition of PHS • Capital increase at Porsche SE (ordinary and preferred shares)
As of comprehensive agreement: Exercise of put/call option for Porsche AG Merger with Phase 3 – 2011 onwards Porsche SE 15.11.2012 – 01.03.2013 – 01.08.2014 – 01.12.2014 – Integration in 20111 14.01.2013 30.04.2013 30.09.2014 31.01.2015 1st Put PSE 1st Call VW 2nd Call VW 2nd Put PSE
Alternatives being investigated1
1 On September 8, 2011, Volkswagen announced: Merger of Volkswagen Aktiengesellschaft and Porsche Automobil Holding SE no longer expected within the time frame laid down in the Comprehensive Agreement 23 On the way to the Integrated Commercial Vehicles Group
MAN is fully consolidated within the Volkswagen Group as of 9 November 2011. Voting rights: Voting rights: 73.76% 89.2% Volkswagen, MAN and Scania are convinced Capital: 71.89% Capital: 62.6% of the industrial logic of a closer cooperation. Target is to achieve at least €200 million per annum in synergies between MAN, Scania and Volkswagen. Initially, these will relate to procurement activities, followed in the medium and long term by a closer cooperation in research and development as well as production.
As per 18 April 2012
Since the stake in Scania held by MAN is now attributable to Volkswagen, Volkswagen’s shareholding in the Swedish truck maker Scania increased to 89.2 (formerly 71.8) percent of the voting rights and 62.6 (49.3) percent of the share capital.
24 2011 vs. 2007: What has changed in the Volkswagen Group?
Improved Balance in Global Sales Global production footprint Newest Technology for our customers Increased global market share Russia, India, China and the US added Proven innovation track record (TSI, DSG) Young model range More flexible and efficient production; Full spectrum of fuel and powertrain Growing in new markets turntable concept enhanced technologies Disciplined inventory control Rolled out MLB toolkit; MQB from 2012 Environmentally friendly products (BlueMotion) Best practice through PHS purchase Flexible labour force and use of time accounts
Extended Brand Portfolio Robust financial situation Better Cooperation within Organisation
10 brands under one roof Excellent Liquidity in the Automotive Industry leading brand management Division Excellent progress at operating level model led by experienced team with Porsche Stable Rating with improved Outlook Enhanced Group co-ordination through High synergy potential Innovative, well financed and Wolfsburg with Scania and MAN geographically Diversified Financial Process Standardisation in all functions Services portfolio
25 Volkswagen Group: Global Automotive Leader 2018
Economic and environmental leadership in the global automotive industry
Economic leadership Environmental leadership
Expansion of brand and product portfolio Diversified portfolio of drivetrain technologies
Increasing global footprint Continuous improvements and emerging markets presence in internal combustion engines Realization of cost savings, toolkit modularisation Leadership in alternative powertrain technologies and localisation of products
Creation of sustainable value High quality standards
Trucks and busses a highly attractive Create an integrated truck company strategic business area with the commitment of Volkswagen All business areas and brand-specific features Significant synergies arising from a cooperation remain untouchable Brand implementation
1
1 49.9% stake since 7 December 2009 26 APPENDIX Volkswagen Group Analysis of operating profit
€ billion
4,5 + 0.3 - 0.6 4,0 + 0.7 + 0.1 -0.2 3,5 + 0.0 3,0
2,5
2,0 3.2 2.9 1,5 1,0
0,5
0,0 JanJan - Mar– Mar Volume/ ExchangeExchange ratesProduct FixedFixed costs/ costs/ Start-MAN/ FinancialFinancial ServicesJan – Mar 2011 Mix/ rates costs Start-upup costs Scania Services 2012 Prices costs incl. PPA
28 Volkswagen Group Headline Figures January to December 2011 vs. 2010 2011 2010 +/- (%) Volume Data1 Deliveries to customers '000 units 8,265 7,203 +14.7 Vehicle sales '000 units 8,361 7,278 +14.9 Production '000 units 8,494 7,358 +15.5
Financial Data (IFRSs) Sales revenue € million 159,337 126,875 +25.6 Operating profit € million 11,271 7,141 +57.8 Profit before tax € million 18,926 8,994 x Profit after tax € million 15,799 7,226 x Earnings per ordinary share (basic) € 33.10 15.17 x Earnings per preferred share (basic) € 33.16 15.23 x Dividend per ordinary share € 3.00 2.20 x Dividend per preferred share € 3.06 2.26 x
Automotive Division2 Cash flows from operating activities € million 17,109 13,930 +22.8 Cash flows from investing activities3 € million 15,998 9,095 +75.9 Of which investments in property, plant & equipment € million 7,929 5,656 +40.2 Net cash flow € million 1,112 4,835 -77.0 Net liquidity4 € million 16,951 18,639 -9.1 1 Volume data including the vehicle production investments Shanghai-Volkswagen Automotive Company Ltd. and FAW-Volkswagen Automotive Company Ltd. These companies are accounted for using the equity method. All figures shown are rounded, so minor discrepancies may arise from addition of these amounts. 2 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions. 3 Excluding acquisition and disposal of equity investments: €9,371 million (€7,034 million). 29 4 As of 31 December 2011 Volkswagen is financially stable – supported by strong capital discipline and significant liquidity
Investments in property, plant and equipment Automotive net liquidity Automotive Division € billion / in % of sales revenue € billion 18.6 7.9 17.0 6.8 15.8
5.8 5.7
4.6 6.6% 10.6 6.2% 5.6% 5.0% 8.0 4.6%
Q1: Q1: 1.7 0.9 2007 2008 2009 2010 2011 2012 2008 2009 2010 2011 03/2012 30 Volkswagen Group deliveries to customers by market1) January to April 2012 vs. 2011 ´000 units January to April 2011
+9.8%+9,8% 1) January to April 2012 3.500
3.000 2,941 2,679
2.500
2.000 -0.6%-0,6%
+16.7%+16,7% 1.500
1,077 1,070 +34.3%+34,3% +23.2%+23,2% +7.0%+7,% 979 +15.9%+15,9% 1.000 839
500 300 321 212 202 249 158 104 120 0 Volkswagen Western Central & North America South America Asia Pacific Rest of World Group Europe Eastern Europe 1) Incl. Scania (Jan – Mar) and MAN (Jan – Mar 2012, since 9th November 2011); 8.6% excl. Scania and MAN 31 Volkswagen up! 4 Doors
32 Volkswagen GTI Cabrio
33 Audi A1 Sportback
34 ŠKODA Citigo 4 Doors
35 SEAT Ibiza
36 Bentley Continental GT V8
37 Lamborghini Urus
38 Volkswagen Amarok Canyon
39 MAN NEOPLAN Skyliner
40 Scania R 480 4x2 Topline
41 Volkswagen Group: Excellence has many names Christine Ritz Head of Group Investor Relations, Volkswagen Aktiengesellschaft Deutsche Bank: German, Swiss & Austrian Conference, Frankfurt, 15/16 May 2012