Report Forthe Year1966 Volkswagenwerk Aktiengesellschaft
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Report forthe Year1966 Volkswagenwerk Aktiengesellschaft Wolfsburg The Board of Directors and Management of Volkswagenwerk Aktiengesellschaft present the Report for the Year 1966 with their compliments Wolfsburg, May 1967 Table of Contents Page Agenda for the Annual Meeting of Stockholders 2 Board of Directors 3 Management 3 Selected Data of Volkswagenwerk AG 4 Report of Management Business Trends in the Automotive Industry in 1966 5 Review of 1966 Operations of Volkswagenwerk AG 7 Production 8 Raw Material Purchases 9 Sales 10 Domestic 12 Export 14 Capital Investments 15 VW Holdings in Domestic and Foreign Subsidiaries and Affiliates 1 6 Selected Data of Major VW Subsidiaries and Affiliates for 1966 18 Investments in Subsidiaries and Affiliates Domestic 19 Foreign 21 Labor Force 24 Outlook 27 Comments on the 1966 Financial Statements 28 Report of the Board of Directors 37 Financial Statements of Volkswagenwerk AG Balance Sheet 38 Statement of Earnings 40 Condensed Consolidated Financial Statements of Volkswagenwerk AG and its Domestic Subsidiaries with Comments 42 Comparative Summary of Selected Financial Data 1962-1966 44 1 Agenda for the Annual Meeting of Stockholders of Volks- 1. Presentation of audited financial statements for wagenwerk AG to be held at 10:00 A.M. on the year ended December 31, 1966, together with the Wednesday, June 28, 1967, at the Stadthalle in reports of Ma nagement and the Board of Directors Wolfsburg. and thei r recommendation with respect to disposition of the net earnings for the year 1966. 2. Resolution with respect to disposition of the net earnings for the year 1966. Management and the Board of Directors propose to distribute, out of net earnings shown in the Balance Sheet, a 20% dividend on the capital stock of DM 600 million entitled to such distribution for 1966. 3. Resolution with respect to discharge of respon- sibility of Management for the year 1966. 4. Resolution with respect to discharge of respon- sibility of the Board of Directors for the year 1966 In respect of items 3 and 4, it is proposed to discharge Management and the Board of Directors of responsibility. 5. Appointment of auditors for the year 1967 The Board of Directors proposes to appoint the Deutsche Revisions- und Treuhand-Aktien- gesellschaft, Treuarbeit, Hanover, as auditors for the year 1967. 2 Board of Directors Management (Aufsichtsrat) (Vorstand) Dr. Josef Rust, Kassel, Chairman since June 29, 1966 Prof. Dr.-Ing. E. h„ Dipl.-Ing. Heinrich Nordhoff, Dr. Dr. h. c. Hans Busch, Düsseldorf, Chairman, Chairman to June 29, 1966 Dr. Kurt Haaf Otto Brenner, Frankfurt, Deputy Chairman Dr. Carl H. Hahn Karl Möller, Quakenbrück, Deputy Chairman Hanz Hiemenz Dr. Rolf Thießen, Frankfurt, Deputy Chairman, Otto Höhne since June 29, 1966 Frank Novotny Hugo Bork, Wolfsburg Dipl.-Ing. Helmut Orlich Dr. h. c. Fritz Butschkau, Düsseldorf Julius Paulsen Siegfried Ehlers, Wolfsburg Dr. Friedrich Thomee Mrs. Elgin Gärtner-Amrhein, Munich Hans Grimm, Wolfsburg, to June 29, 1966 Walter Haefner, Zürich Prof. Dr. Karl M. Hettlage, Bad Godesberg, to June 29, 1966 Heinz Hilbich, Hanover Prof. Dr. Eduard Justi, Brunswick Alfred Kübel, Braunlage Dr. Wolfram Langer, Bad Godesberg, since June 29, 1966 Dr. Horst Rheinfels, Cologne Dr. Hermann Richter, Düsseldorf Erich Schilling, Ingolstadt, since June 29, 1966 Peter Stroh, Kassel Dr. Wilhelm Vallenthin, Hamburg 3 Selected Data of Volkswagenwerk AG 1966 1965 Production Volkswagenwerk AG total number of vehicles 1,476,509 average per working day 1,447,660 number of vehicles 6,162 6,108 Volkswagenwerk AG and its Subsidiaries and Affiliates total number of vehicles 1,650,487 1,594,861 number of vehicles average per working day 6,886 6,729 Sales (units) Volkswagenwerk AG number of vehicles 1,459,426 1,443,599 number of vehicles Volkswagenwerk AG and its Subsidiaries and Affiliates 1,605,267 1,580,214 Sales (DM) Volkswagenwerk AG total in million DM 7,797 7,458 domestic sales % of total sales 37 43 export sales % of total sales 63 57 per employee DM 82,422 80,592 Volkswagenwerk AG and its Subsidiaries and Affiliates total in million DM 9,998 9,268 DM per employee 78,565 75,504 Investments Volkswagenwerk AG physical plant in million DM 500 financial investments in million DM 485 179 total investments in million DM 273 679 758 Volkswagenwerk AG and its Subsidiaries and Affiliates physical plant in million DM 731 702 Average Labor Force Volkswagenwerk AG total labor force 94,602 Volkswagenwerk AG and its Subsidiaries and Affiliates total labor force 92,541 127,264 122,742 Net Earnings of Volkswagenwerk AG in million DM 376 300 retained for use in the business in million DM 256 dividends (proposed or paid) in million DM 180 120 % of capital stock 120 entitled to dividends 20 20 Cash Flow of Volkswagenwerk AG in million DM 807 724 4 Report of Management Business Trends in the Automotive Industry Output of Major Automobile Producing Countries in 1966 and of Volkswagenwerk AG* in millions of units In 1966, world-wide automobile production of 24.5 million vehicles exceeded the all-time high of the preceding year by 1.4%. Of the total production, 86% was manufactured by the six major automobile producing countries. Although their total contribution to the world-wide market remained virtually unchanged compared to 1965, production trends among the six individual countries fluctuated considerably. The United States of America, the largest automobile producer in the world, experienced a decrease in automobile production after several years of substantial growth. Production of 10.4 million vehicles, a decrease of 6.7% below 1965, accounted for 42.4% of the world-wide automobile production compared to 46.1% in 1965. In the Federal Republic of Germany, the second largest automobile manufacturer in the world, the previous year's moderate rate of expansion in automobile production continued in 1966 and, as a result, more than 3 million vehicles were produced for the first time in German automobile history. The increase for the year of 2.5% was due primarily to a particularly good first six months of 1966. The Federal Republic remained the largest automobile exporter in the world by exporting 1.64 million vehicles or 53.7% of its total 1966 production of 3.05 million units. With an increase in production of 2.1.9% to 2.29 million vehicles in 1966, Japan, for the first time, became the third largest automobile manufacturer in the world, surpassing Great Britain. Export sales rose even more than production with an increase of 31.7% over 1965 to a total of 256,000 vehicles. The British automotive industry was affected by the severe measures instituted by the Government to combat inflation. Automobile production decreased by 6.2% to 2.04 million vehicles in 1966. Continuation of these restrictive measures will preclude a quick recovery by the automotive industry. The French automobile industry benefited from a general economic recovery during 1966. Production including Auto Union G. m. b. H. beginning in 1965 5 Automobile Exports of the Major Producing Countries and of Volkswagenwerk AG' in Units of 100,000 of 1 88 million vehicles and export sales of 641,000 units increased over 1965 by 21.2% and 21.9%, respectively. The automobile industry in Italy benefited similarly from a general economic stabilization in that country. Production increased by 15.8% to 1.34 million units in 1966. including Auto Union G. m. b. H.beglnning in 1965 6 Review of 1966 Operations of Volkswagenwerk AG Volkswagenwerk can look back on a generally In 1966, one of the more significant events at Volks- successful business year. Production and sales wagenwerk AG was the increase in capital stock, continued to increase, but at a lesser rate of growth which was offered to stockholders at the ratio of 1 than in prior years. Volkswagenwerk's policy of new share for each 4 shares held at the price of 225% developing new and expanding existing export markets of par value. The additional issue of shares increased the made it possible to offset the decrease in domestic capital stock of the Company by DM 150 million to sales toward the end of 1966 by increasing export DM 750 million and the legal reserve by DM 173 sales. million, representing the excess of net proceeds over par value. The Volkswagenwerk Foundation, in lieu Our subsidiary in the United States of America was of the Federal Republic of Germany, and the State extremely successful with the sale of approximately of Lower Saxony each acquired 20% of the new 480 000 Volkswagen vehicles. Our companies in shares, based on their proportionate share of the Brazil and Mexico also had to satisfy an increasing capital stock held. The funds received from the demand for our products. issuance of the new shares will permit us to make the investments for technological research and develop- In November 1966, the twelve millionth Volkswagen ment required to keep our products competitive in the was produced at the factory in Wolfsburg. future. With consolidated sales of some DM 10,000 million, Toward the end of 1966 the demand for automobiles Volkswagenwerk AG and its subsidiaries and affiliates on the home market was also affected to a great achieved a new all-time high in sales for a West extent by the general weakening of the economy. German industrial enterprise. Auto Union G.m.b.H., Thus, the Management had no alternative but to cut whose remaining shares of capital stock were acquired back production by introducing short-time working by Volkswagenwerk AG in 1966, contributed to the in January, 1967. increase in sales and, with its diversified AUDI product line, succeeded in earning a profit for 1966.