The ongoing Covid-19 pandemic is significantly impacting the business of the Volkswagen Group. As a result, automotive retail has largely come to a standstill. The resulting drop in customer demand and delivery bottlenecks led to production stops within the Volkswagen Group. These developments have a negative impact on the Volkswagen Group’s expected financial results.
Turnover of around 55 billion euros. Operating profit of EUR 0.9 billion and an operating return on sales of around 1.6 percent. The turmoil on the raw materials and capital markets led to considerable negative fair value valuations on raw material hedges and negative currency effects, which had a negative impact on earnings in the first quarter of 2020 of around EUR 1.3 billion.
The Automotive Division’s net cash flow was EUR -2.5 billion. The main causes were the weaker result due to the pandemic and the impact on working capital from higher inventories and reduced liabilities.
The net liquidity in the automotive sector amounts to EUR 17.8 billion. The Volkswagen Group has already taken numerous countermeasures to reduce costs. In addition, securing liquidity has top priority and the focus is particularly on optimizing working capital and prioritizing investments in core areas.
The Volkswagen Group plans to gradually ramp up production with increased protective measures for employees. The positive development in China shows that a return to normality and an economic recovery in the further course of the year appear possible.
Due to the current developments, the Board of Management of Volkswagen AG currently assumes that the expectations for fiscal year 2020, which were published with the 2019 annual financial statements, can no longer be achieved.
At the moment it is not foreseeable when a new forecast for the current financial year is possible. The effects of the pandemic on customer demand, supply chains and production cannot currently be reliably assessed.