VOLKSWAGEN AG Deutsche Bank German Corporate Conference. Oliver Larkin Senior Investor Relations Manager, Volkswagen AG. Tokyo, September 2005

Transcription

1 VOLKSWAGEN AG Deutsche Bank German Corporate Conference Oliver Larkin Senior Investor Relations Manager, Volkswagen AG Tokyo, September 2005

2 Agenda H Strategy and Targets

3 H1 2005: Volkswagen Group Deliveries to Customers vs. H , % 2,516 2,559 Jan. June 2004 Jan. June , , , % 1,747 1, % 1,397 1, % Volkswagen Brand Group Audi Brand Group +31.9% Commercial Vehicles Volkswagen Group Western Europe +1.2% Central / Eastern Europe -14.1% +15.4% North America South America/ South Africa -10.4% Asia-Pacific -12.6% Middle East and Rest Africa 3

4 billion 1,5 H1 2005: Volkswagen Group Analysis of Operating Profit , , billion = % 0,0 Jan.-June 2004 Volume / Price / Mix Currency Product cost Fixed costs / Start-up costs Special items Jan.-June

5 H1 2005: Volkswagen Group Analysis by Business Line January June Sales Revenue Operating Result million ) 2004 % % Volkswagen brand group 23,722 24, N/A Audi brand group 14,112 13, Commercial Vehicles 3,460 2, N/A Remaining companies 2) Financial Services / Europcar 4,581 4, Special Items -128 Volkswagen Group 46,016 45, , ) Restated. 2) Primarily AutoVision GmbH, Coordination Center Volkswagen SCS, Volkswagen International Finance N.V., Volkswagen Investments Ltd., VW Kraftwerk GmbH, Volkswagen Immobilien, gedas group, Volkswagen Beteiligungs-Gesellschaft mbh (including VW Versicherungsvermittlungs-GmbH in the previous year). 5

6 H1 2005: Volkswagen Group Analysis by Market January June Sales Revenue Operating Result million % % Europe / Remaining markets 34,562 32, ,938 1, North America 5,987 6, South America / South Africa 3,035 2, N/A Asia- Pacific 2) 2,432 3, N/A Special Items -128 Volkswagen Group 2) 46,016 45, , ) Restated. 2) The sales revenue and operating results of the joint venture companies in China are not included in the figures for the Group and the Asia-Pacific market. The Chinese companies are consolidated using the equity method, and recorded an operating result (proportional) of -23 million ( 251 million). 6

7 H1 2005: Outlook Interim Report January June 2005 As expected, there was no significant improvement in the economic environment in the first six months of Although the German passenger car market developed better in the second quarter of 2005 than in the first three months, the overall situation in the most important automotive markets remained difficult. Despite the slight improvement in exchange rates for eurozone exporters in recent months, the global situation remains unfavorable for us. In addition, we expect that competitive pressures will tend to increase and that the cost of raw materials especially steel and plastics will remain at high levels. Moreover, we believe that the high oil price and the consequent jump in fuel prices to new record highs will further dampen automotive consumer confidence. We are expecting an improvement in our delivery figures for the US passenger car market on the back of the model changes for the Jetta and the Passat and the full availability of the Audi A4 and Audi A6 in the second half of the year. In Western Europe, we believe that with our updated model program featuring the new Passat, Golf Plus, Polo and Fox, we will build on the good sales development in recent months and further extend our market share. The market launches of the Passat Variant, Audi RS 4 and SEAT Leon in the second half of the year will also make a significant contribution to this growth. For the year as a whole, we are therefore confident that deliveries to customers will exceed the previous year s volume. We are systematically continuing the Group-wide ForMotion program and will achieve our goal of a EUR 3.1 billion earnings contribution in In this context, we have initiated measures to restore our competitive position and return to profitability in the USA. In addition, we will restructure our business in China. For this reason, we continue to expect a year-on-year improvement in both 2005 operating profit after special items and profit before tax. 7

8 Strategy and Targets 2008 Corporate Restructuring Product Strategy Automobility Financial Strength Regional Positioning Targets for

9 Corporate Restructuring: Volkswagen Group: Organizational Structure Group Executive Board Chairman of of the the Board Board of of Management Finance and and Controlling Procurement Human Resources (Labour Director) Chairman of of the the Volkswagen Brand Brand Group Group Chairman of of the the Audi Audi Brand Brand Group Group B. B. Pischetsrieder H.D. H.D. Pötsch F.J. F.J. Garcia Garcia Sanz Sanz acting acting (B.Pischetsrieder) W. W. Bernhard M. M. Winterkorn Group Group Research and and Development Group Group Marketing and and Sales Sales Group Group Organisation and and IT IT Group Group Manufacturing and and Logistics Group Group Quality Management 9

10 Corporate Restructuring: Group Marketing and Sales Group Marketing and Sales Group Group Brand Brand Strategy and and Communications Group Group Product Strategy Parts Parts Business Group Group Sales Sales Companies Group Group Services Multi Multi Brand Brand Sales Sales (Fleet (Fleet + VIP) VIP) Worldwide Sales Sales Development (Wholesale and and Retail) Retail) Marketing and Sales Responsibility worldwide on Brand Level Volkswagen Commercial Vehicles 10

11 Strategy and Targets 2008 Corporate Restructuring Product Strategy Automobility Financial Strength Life Life Cycle Management Product Planning Modularization Regional Positioning Targets for

12 Product Strategy: Life Cycle Management: Volkswagen Brand Western Europe Time A 00 Fox 04/05 Segment A 0 A A / B Polo 09/01 Touran 03/03 Golf 09/03 Golf Plus 01/05 Jetta 08/05 Convertible 2006 B Passat 03/05 Var. 08/

13 Product Strategy: Volkswagen Group Product Matrix Hatch Notch Station MPV Pickup/ Del. Van SUV Sport Coupé Lim. Coupé Conv. Roadster Luxury Upper *) Upper Middle Middle Compact Small Mini new in 2005/

14 Product Strategy: Volkswagen Modular Strategy Structure and Content of Module Box 1 Group Tool Box Leiter KAK Module = Modulmanager Manager 4 Management Sectors (chassis, body and trim, power train, electrical system) ca. 30 Component Kits (e.g. gear boxes, exhaust system, front axle, etc.) Konzernweite Module Executives Verantwortung = Modulverantwortlicher Lead Developer ca. 150 Module Families (e.g. DSG gear box, engine control unit, exhaust silencer, etc.) ca. 450 Modules (e.g. rear axle for heavy loading, etc.) 14

15 Strategy and Targets 2008 Corporate Restructuring Product Strategy Automobility Financial Strength Regional Positioning Targets for

16 Automobility: Facts and Impacts of the main Units Mobility is the core idea for our automotive value chain. In addition to their automotive mobility we also provide our customers with Financial Services and boost their financial mobility. We have two strategic business fields: the primary automobile service and life cycle services. Lifecycle Services comprises customer-related services such as financing, leasing, rental and insurance. The relationship between the two strategic business fields is reciprocal." Dr. Bernd Pischetsrieder Chairman of the Board of Volkswagen AG (Investor Conference, March 9, 2005) Loyalty Products (Direct Banking, Insurances etc.) Used Car Rent-a-car Insurance After Sales Sales Wertschöpfung Audi Wertschöpfung AG Audi Bank Fleet Management Credit/Leasing R&D, Procurement, Production 16

17 Strategy and Targets 2008 Corporate Restructuring Product Strategy Automobility Financial Strength Regional Positioning Targets for 2008 Key Key Target: RoI RoI Cost Control: ForMotion Capex Cash Flow 17

18 Financial Strength: Development of RoI % RoI target: 9% Strong negative headwinds: 9.4 Currency Market environment // pricing Depreciation creep

19 Financial Strength: ForMotion Program Status as of June 30, % 6.2% 4.2% 33.0% Overheads / Process Optimization One-time Expenditure Product Costs Performance Enhancement Sales 8.7% 21.2% 22.3% Commercial Vehicles Foreign Sales Subsidiaries Financial Services Total ForMotion effects January-June 2005: 1.7 billion 19

20 Financial Strength: Capex Development % of revenues, Automotive Division average 2004 target corridor average H Q Q Q Q Q Q

21 Financial Strength: Cash Flows from Operating Activities and Cash Flows from Investing Activities million, Automotive Division 1) ,937 3,495 3,765 3,334 2,874 2, January June 2003 January June 2004 January June 2005 Cash flows investing activities Cash flows operating activities 1) Including allocation of the consolidation adjustments between the Automotive and Financial Services divisions. 21

22 Strategy and Targets 2008 Corporate Restructuring Product Strategy Automobility Financial Strength Regional Positioning Targets for 2008 Europe North America China 22

23 Regional Positioning: Operating Profit Analysis by Market H H billion ) H H H H Europe / Remaining markets North America South America / South Africa 2) Asia- Pacific 3) Volkswagen Group 1) Restated. 2) The sales revenue and operating results of the joint venture companies in China are not included in the figures for the Group and the Asia-Pacific market. The Chinese companies are consolidated using the equity method. 3) including special items 23

24 Regional Positioning: Volkswagen Group Central and Eastern European Production Poland Volkswagen-Poznan, Poznan Volkswagen Motor Polska, Polkowice Czech Republic Škoda Auto, Mladá Boleslav Škoda Auto, Vrchlabi Škoda Auto, Kvasiny Slovakia Volkswagen Slovakia, Martin Volkswagen Slovakia, Bratislava Bosnia-Herzegovina Volkswagen Sarajevo, Sarajevo Ukraine ZAO Eurocar Hungary Audi Hungaria, Györ 24

25 Regional Positioning: North American Region: Update In 2004 VW posted an Operating Loss of close to 1 billion. The following operational steps will influence 2005: New volume models: new Jetta already available in Q2, Passat available in H2, new Audi A6 and A4 fully available in 2005, Audi A3 Sportback launched. Full impact will be seen in Capacity utilization in Puebla will improve with the Jetta. The whole organization in the USA is currently under review and in 2005 cost reductions will be implemented. Overall cost savings from ForMotion, in particular product costs, will also benefit the region. The difficult market environment combined with an ongoing negative exchange rate development means that break-even is not possible for

26 Regional Positioning: China Restructuring Program Branding and Positioning Product Cost Product Sales and Marketing Synergy between Joint Ventures Corporate Culture 26

27 Strategy and Targets 2008 Corporate Restructuring Product Strategy Automobility Financial Strength Regional Positioning Targets for

28 ForMotion plus: Negative external trends continue Earnings improvement plan continued: intensity stepped up All measures, e.g. personnel and purchasing, included in this scheme Target: 4 billion net improvement in profit before tax in

29 Volkswagen Passat Variant 29

30 Appendix 30

31 Volkswagen Group Income Statement millions Jan. - June 2004 % of total Jan. - June 2005 % of total Y o Y Change in % Sales revenue 1) 45, % 46, % Costs of sales 1) 39, % 39, % Gross profit 5, % 6, % Distribution expenses 4, % 4, % General and administrative expenses 1, % 1, % Other operating result % % Operating profit % 1, % Financial result % % -491 n/a Result before tax % % Income tax expense % % Result after tax % % ) Restated. 31

32 Volkswagen Group Research and Development Costs million, Automotive Division January June 2004 January June % % Total R&D costs of which capitalized amortization recognized in the income statement Total R&D costs of which capitalized amortization recognized in the income statement 32

33 Net Liquidity by Division millions as of January 1, 2005 as of June 30, ,734-1,125-45,016-48,780 Automotive * Financial Services * Including allocation of the consolidation adjustments between the Automotive and Financial Services divisions. 33

34 Volkswagen Fox 34

35 Volkswagen Golf Plus 35

36 Volkswagen Golf GTI 36

37 Volkswagen Jetta 37

38 Volkswagen Passat 38

39 Skoda Octavia 39

40 Bentley Continental Flying Spur 40

41 Volkswagen T5 41

42 Audi A3 Sportback 42

43 Audi RS4 43

44 Audi Q7 44

45 SEAT Leon 45

46 Lamborghini Murciélago Roadster 46

47 VOLKSWAGEN AG Deutsche Bank German Corporate Conference Oliver Larkin Senior Investor Relations Manager, Volkswagen AG Tokyo, September 2005