Volkswagen Group: Financial sustainability on core strengths

Transcription

1 Volkswagen Group: Financial sustainability on core strengths Hans Dieter Pötsch Member of the Board of Management, Volkswagen Aktiengesellschaft Volkswagen Investor Day, Frankfurt, 9 September 2013

2 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 Such statements are valid on the date of publication and can be superceded. This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.

3 Volkswagen Group A global economic and environmental leader by 2018 Potential upside Product portfolio extension North American expansion and market recovery Commercial vehicle strategy and market recovery Financial Services: strengthen the automotive value chain Synergy potential Leveraging best practices across the Group Purchasing, production, and distribution benefits Normalized RoE based on 8% equity ratio 2) Including China Note: All stated Volkswagen Group figures represent financial targets for 2018 Growth market focus Increased market penetration Emerging markets expansion Balanced global footprint Top employer Leading in customer satisfaction and quality Volumes > 10 million units p.a. 2) Operating profit measures Strong cost control Volkswagen Group profit before tax margin > 8% Process/product optimization Regional scale effects 2 3 Modular toolkit strategy Reduction in investment, development and unit costs Scale and efficiency effects Increased production flexibility Reduced time to market Capital discipline > 16% RoI target in automotive business 20% RoE goal in Financial Services Around 6% automotive capex in PPE/sales

4 Volkswagen Group Leveraging the power of three strong pillars Passenger Cars Automotive Division Commercial Vehicles / Power Engineering Financial Services Division Volkswagen Financial Services Europe / Asia-Pacific / North and South America Financial Services USA / Canada / Spain / Argentina Remaining companies Scania Financial Services MAN Financial Services Porsche Holding Financial Services Porsche Financial Services

5 Passenger Cars Nine independent brands addressing all customer needs Passenger Cars Automotive Division Remaining companies

6 Passenger Cars Strong market penetration through well positioned and differentiated brands Sporty Premium Value for Money Economical Positioning focus Volume brands: Volkswagen Mainstream mobility for the upmarket driver ŠKODA Functional and roomy cars for the product-value focussed audience SEAT Sporty and stylish for the young and young-in-mind driver Family Premium brands: Audi Progressive prestige for innovation seekers Porsche Sporty prestige for the elite high end client Source: Volkswagen Group, EU 5 markets

7 Key sales markets offer substantial growth opportunities bf Market growth (million units) % % +13% Central & Eastern Europe (incl. Russia) 2018 Western Europe North America China (incl. HK) +68% % +26% % India 2018 South America2) World 2018 Includes Cyprus and Malta Includes Central America and Caribbean Source: IHS Automotive (data status: July 2013), rounded Note: Market = Cars and LCVs 2)

8 Above-average growth rates in premium and SUV segments Compound annual growth rates % 4.5% 3.6% 2.2% Hatch % SUV 4.3 SUV % 18.6 Includes Cyprus and Malta 2) Includes Central America and Caribbean 3) Passenger car segment with the highest CAGR Source: IHS Automotive (data status: July 2013), rounded Note: Market = Cars and LCVs Segment3) South America2) Premium % SUV 4.1% SUV 0.07 SUV 6.0% 5.3% % 21.2% 12.1% 3.9% 1.1 Central & Eastern Europe (incl. Russia) Western Europe North America % World 9.1% MPV India China (incl. HK) Legend: 0.2 Segment3) % Premium 2.1% 4.5% Total 3.6% 6.0% Total bf Sales 2012

9 All brands contribute substantially to the targets of the Volkswagen Group Targets Deliveries to customers 6,600,000 > 1,500,000 > 500,000 > 2,000,000 3) > 200,000 > 15,000 Sustainable operating profit margin 2) > 6% 6-8% > 5% 8-10% > 15% > 10% Return on Investment in the Automotive Division 13.5% 17.7% 16.6% > 16% 9.5% 10.9% 3.8% Including deliveries to customers by joint venture companies in China 2) Excluding operating profit of joint venture companies in China which are accounted for using the equity method 3) Target for year 2020 Target

10 Volkswagen Passenger Cars The Group s new markets spearhead Chattanooga (201 Kaluga (2007) Dealer increase : >20% Silao (2013) High investments, such as ramping up local production technology transfer building up dealer network Dealer increase: >120% Dealer increase: >50% Expected growth of number of dealerships will pay off with higher deliveries to customers higher brand returns significant synergy potential within the Group Pune (2009) Production locations Production locations under construction Dealer increase: >650% Dealer increase: >170% Ningbo (2013) Changsha (2015) Urumqi (2013) Foshan (2013)

11 Volkswagen Passenger Cars The Group s front-runner 6,000 4,000 2,000 Deliveries to customers ( 000 units) > 6.6 m Rest of World Asia Pacific South America North America Europe (w/o Germany) Germany Lead role in terms of Powertrain MQB Sustainability DSG Production footprint expansion Products Operating profit margin 2) Key drivers to achieve targets 8% > 6% 6% 4% 3.7% 4.0% 2.6% 2.7% 3.5% 2% 0.9% 0% Drive regional diversification in sales and production with local products for local needs Continue product firework including further derivatives Utilize margin potential in growth regions Successful execution of MQB strategy Strict cost and investment discipline while retaining quality and price leadership Including deliveries to customers by joint venture companies in China 2) Excluding operating profit of joint venture companies in China which are accounted for using the equity method

12 ŠKODA Growing sustainably and profitably 1,500 1, Deliveries to customers ( 000 units) > 1.5 m Rest of world Asia Pacific CEE 5 Citigo +1 Portfolio expansion New SUV Spaceback Rapid Western Europe Operating profit margin 2) Key drivers to achieve targets 10% 8% 6% 4% 2% 0% 8.9% 7.0% 2.9% 5.1% 7.2% 6.8% 6-8% 3) Continue model firework and improving positioning Entering new segments (broader model portfolio) Continue regional diversification in sales and production: focus on emerging markets Increase production efficiency Including deliveries to customers by joint venture companies in China 2) Joint Venture companies in China are consolidated at equity in the financial result of the Volkswagen Group 3) Sustainable operating profit margin target range to be achieved in the mid-term

13 SEAT Three cornerstones to sustainable profitability Deliveries to customers ( 000 units) > 500 Rest of world Americas CEE Western Europe Strategic actions to achieve targets 1 Focus on models and segments with higher profitability 2 Increase sales performance through comprehensive structure enhancement and streamlining of dealerships 6% 3% 0% -3% -6% -9% 0.1% Operating profit margin -1.5% -2.4% -4.2% -6.2% -7.4% > 5% Strict cost and investment discipline 3 in all areas to improve profitability

14 Trends in customer demand reflected in model firework of volume brands 2013 global product launches (selection) Major body styles in global volume brand model launch portfolio 2012 Beetle Cabrio Golf GTI/GTD Golf CNG cross up! Jetta Hybrid Golf Variant e-up! New Santana 2018 Jetta (A2) Lavida Saveiro GP Gol Track Octavia Sedan Superb Rapid Spaceback Yeti León León ST Sedan Hatchback SUV MPV Volkswagen Group launches of top 4 volume model body styles (only basis models, no derivatives, cross versions or larger engine variants etc.)

15 Audi Focused on leadership in image, volume and profit 2,000 1,500 1, Deliveries to customers ( 000 units) > 2.0 m > 1.5 m Rest of world Asia Pacific North America Europe The most progressive brand Operating return on sales 2) Six target dimensions 15% 12% 9% 6% 3% 0% 8.0% 8.1% 5.4% 9.4% 12.1% 11.0% 8-10% Top image position and customer mix Leaders in innovation Profitable growth, including enhanced N. America foothold Attractive employer worldwide Superior financial strength Sustainability of products and processes Including deliveries to customers by joint venture companies in China 2) Excluding operating profit of joint venture companies in China which are accounted for using the equity method 3) In 2013 a margin at the upper end of the target range of 8-10% is expected to be achieved

16 Porsche Value creating growth ahead Deliveries to customers ( 000 units) Successful model line-up 200 > 200 Asia Pacific / RoW Americas 100 Europe Increase customer enthusiasm providing a unique purchase and ownership experience 20% 15% 10% 5% 0% Operating profit margin 18.1% 18.7% 17.6% > 15% Excellent employer and business partner Valuecreating growth Sales of > 200,000 cars at a typical Porsche price premium Return on Capital > 21% and Return on Sales > 15% Key drivers to achieve targets Extension of Porsche model line-up while maintaining superior brand image Customer enthusiasm for high-end quality premium vehicles Development of modular toolkits for luxury brands Continuous value-adding investments Realization of annual synergies within the Integrated Automotive Group Porsche fully consolidated as from 1 August 2012

17 Substantial synergies throughout the Group from the creation of the Integrated Automotive Group with Porsche New models / segments Porsche Macan New C-SUV generation (Q7, Touareg and Cayenne) Shared engine portfolio V6 / V8 TDI New gasoline engines (3.0 TFSI) 400 m in 2013 Financial Services Improved refinancing conditions Leasing 700 m > 1 bn Purchasing Volume bundling in production and non-production Sales and Marketing Shared national sales companies Sports car market in China Initial target Mid-term target

18 Volkswagen Group to extend leadership in premium segment with enhanced portfolio 2013 global product launches (selection) Major body styles in global premium brand model launch portfolio 2012 A3 Sportback SQ5 A3 Sedan A8 RS Q3 RS 6 Avant RS 7 R Cayman Basis/S Flying Spur Panamera S Hybrid Continental GTC Speed 911 Turbo S Mulsanne Sedan Hatchback SUV Coupé Roadster Volkswagen Group launches of top 5 premium model body styles (only basis models, no derivatives, cross versions or larger engine variants etc.)

19 USA Returning to sustainable profit Electronics Research Laboratory Total Market Silao Plant (engines) Puebla Plant Expanding local footprint Herndon Headquarters Chattanooga Plant Atlanta Headquarters San José Chiapa Plant (SOP 2016) LCV segment remains a large opportunity Segment structure 2012 LCVs Cars Figures including Porsche as from 1 August ) Thereof Passenger Cars +6.9%, Light Commercial Vehicles +12.7% Continued growth momentum in the U.S. market Deliveries in 000 units by brands 1, Volkswagen Audi Porsche Other Clean Diesel as a strong USP in the US Deliveries to customers Diesel deliveries in 000 units (Volkswagen Group) Jan - Aug 2013 vs. Jan - Aug % % % % 2) Source: POLK, Volkswagen Group of America, Inc. ~ 25% Other ~75% Volkswagen Group Diesel Passenger Car market in the US in 2012

20 USA Leveraging the power of the Group 60% 40% Rising Volkswagen Brand customer loyalty Audi continues to deliver high-quality growth $ % % 20% Volkswagen Brand Segment adj. industry Source: POLK, Volkswagen Group of America, Inc. Continued strong momentum at Porsche Deliveries in 000 units, by model $ billion % Average selling price Share of U.S. premium market VW Credit, Inc. facilitates profitable growth 90% 70% 50% Boxster/Cayman 911 Cayenne Panamera 10 2) e Total assets Penetration rate in % 30% Porsche fully consolidated as from 1 August ) Volkswagen/Audi/Ducati only

21 Brazil Short-term challenge, mid-term opportunity Local production of market-leading models Deliveries to customers ( 000 units) Gol Fox 1, > 1,000 30% 27% % São Carlos (engines) Anchieta Taubaté Curitiba Saveiro Target Group deliveries Market share 21% 18% A rapidly changing competitive landscape Number of automotive companies in the Brazilian market Importers Other local producers Actions to reach the 2018 sales target for Brazil Renew existing products Introduction of MQB technology Reach 95% market coverage ~ 20 new models in > 1 million units 1980's 1990's e Source: Anfavea; own research "Big 4" Cost-focused restructuring Volkswagen, Fiat, General Motors, Ford

22 ASEAN Strong market opportunity applying Group resources Market sales development and outlook in million units % p.a. Other 4 3 Philippines Malaysia 2 Thailand 1 Indonesia 0 Market structure 2012 Local content 60% 0-40% Volkswagen Group approach for ASEAN Short-term Mid-term Long-term MKD local-for-local ASEAN CKD / FSP hub Vision Technology Leader Pickup 19% SUV Other C, D, MPV/ 10% 4% E A000 Van 3% 2% 26% B 30% Hatch 16% Sedan 25% A 21% A00 4% A0 40% >0% Foot in the door Low Medium High Production volume Source: IHS Automotive (data status: July 2013)

23 Improved segment and market exposure provides stable earnings platform Passenger Cars Deliveries Production Segments Group Operating Profit 2) 17% 14% 2% % 15% 12% 2% % 3% 16% 12% % 14% % 9% 8% 9% 4% % 7% 32% 17% 10% 1% % 30% 12% 11% 39% 7% % 39% 8% 11% % 38% 9% 6% Western Europe Central & Eastern Europe North America 8% Asia-Pacific South America Rest of World 13% 39% Station wagon Hatchback Sedan SUV Other 24% Premium cars Volume cars CV, PE 3) FS Jan Jun 2013 vs. Jan Dec 2007, figures excluding MAN and Scania. Porsche fully consolidated as from 1 August ) Split of Group Operating Profit excluding Other / Consolidation and PPA 3) Commercial Vehicles / Power Engineering business area

24 Diversification as significant driver of improved investment returns Volkswagen Group deliveries by region Operating performance of Automotive Division in million units / % billion RoI % % % 8% % Europe (excl. Germany) Germany North America South America Asia Pacific Rest of World Proportionate operating profit of Chinese joint ventures Plus earnings effects of ppa Operating profit, Automotive Division Return on Investment (right scale) 0% Deliveries to customers Automotive Division, including MAN and Scania

25 Volkswagen Group toolkit strategy and responsibilities Continuous roll-out of toolkit strategy across segments, regions and brands Vehicle price A000 A00 A0 A B C D E NSF New Small Family MQB Modular Transverse Toolkit MLB Modular Longitudinal Toolkit MSB Modular Standard Drive Train Toolkit MSB MLB Responsibilities NSF MQB Established markets Emerging markets Vehicle classes

26 Global roll-out of toolkits supports flexibility and localization Global roll-out of toolkit strategy MQB & MLB share in Volkswagen Group production Existing MQB production locations MQB locations (year-end) > > MQB MLB Rest MQB volume China

27 MQB Driving forward economies of scale in unit cost, investment and supporting achievement of emission targets MQB platform ca. 60% of total material costs Distribution of MQB savings Different powertrains The MQB's flexible design is able to accommodate alternative drives: Lower cost per unit Less EHpV Less one-off expenditures = Potential savings Additional serial and option content Savings to be partly absorbed to fulfill regulatory and legal requirements Margin improvement Savings Expenditures Invest Engineered Hours per Vehicle

28 Driving the future Serving all customer needs Hybrid vehicle (PHEV) Volkswagen XL1 Porsche 918 Spyder Porsche Panamera S E-Hybrid Audi A3 e-tron Volkswagen Golf TwinDrive + Battery vehicle (BEV) Volkswagen e-up! Volkswagen e-golf CNG Compressed Natural Gas Audi A3 g-tron Volkswagen Golf TGI SEAT León ŠKODA Octavia Sedan ŠKODA Octavia Combi SEAT León ST Ethanol 2) Volkswagen Saveiro Volkswagen Gol Rallye Market introduction of Volkswagen Group models with alternative drivetrains 2) Developed for distribution in the Brazilian market Volkswagen Fox Bluemotion Volkswagen up! Volkswagen CrossFox Volkswagen SpaceFox

29 Commercial Vehicles A cornerstone in Volkswagen Group s Strategy 2018 Automotive Division Commercial Vehicles / Power Engineering

30 The business model for commercial vehicles in advanced economies Buyers of transport services Logistics solutions Commercial Vehicle Brand Focus on optimal vehicle specification and service package Transport companies

31 Volkswagen Commercial Vehicles Deliveries to customers ( 000 units) Earnings potential LCV % +1% -21% +23% +21% +4% +15% Rest of world Asia Pacific Central & Eastern Europe Western Europe Service business Automotive business Increase in earnings along the whole value chain Finance & leasing Spare parts business Maintenance contracts Mobility guarantees 2012 future Operating profit margin Key drivers to achieve targets 8% 6% 4% 2% 0% 3.3% 3.9% 5.9% 3.1% 5.0% 4.5% 7-8% Improving positioning in a difficult economic environment Renewal of model range Improving business case for light commercial vehicles Regional diversification in sales and production Increase production efficiency Including former Volkswagen Caminhões e Õnibus Industria e Comercio de Veiculos Comerciais Ltda

32 Scania Deliveries to customers ( 000 units) Carbon dioxide emissions per tonne-km % -3% -41% +47% +26% -16% Rest of world Asia Pacific Latin America Eurasia Europe Logistics Drivers Vehicle engineering Biofuels 50% Support from: Customer collaboration Legislators Operating profit margin Key drivers 20% 15% 10% 5% 0% 14.4% 14.1% 4.0% 16.3% 14.1% 10.4% Strengthen market position and increase of market share Expansion of sales and services capacity in fast-growing markets Leading in quality with efficient and sustainable technology Prioritized R&D investments aimed at strengthening competitiveness

33 MAN Commercial Vehicles Deliveries to customers ( 000 units) Efficient transport solutions % +23% +53% -14% +3% -10% Buses Trucks Continuous development of product range and customer oriented service solutions Operating profit margin Key drivers 12% 9% 6% 3% 0% 10.0% 10.0% 0.7% 5.0% 7.7% 3.9% Organic and profitable growth worldwide strengthening of backbone Europe and Latin America and expansion of business to overseas countries Leading in quality with efficient and sustainable technology Further development of after sales product portfolio Integration of MAN Latin America (formerly Volkswagen Caminhões e Õnibus Industria e Comercio de Veiculos Comerciais Ltda)

34 Volkswagen Group Core strategic achievements provide foundation for robust shareholder returns Continuous development of outstanding product portfolio Expansion of international sales & production footprint Integrated Automotive Group Start-up of MQB DPLTA Expansion of product portfolio and execution of toolkit strategy Focus on growth markets and segments Leveraging of synergies within the Group Strict cost and investment discipline Improving processes and structure Moving forward Domination and Profit & Loss Transfer Agreement

35 Strong cash generation and sufficient net liquidity bn Operating cash flow and investments (automotive) bn Net liquidity (automotive) Op. cash flow Investing cash flow Equity investments 2) H ) Net cash flow H Cash flow from investing activities attributable to operating activities 2) Cash flow from acquisition and disposal of equity investments 3) Net cash flow before acquisition and disposal of equity investments

36 Continuous dividend development on a sustainable basis Development of dividend pay-out and adjusted pay-out ratio in per share % % 17.8% Volkswagen Ordinary Shares Volkswagen Preferred Shares Mid-term target Total dividend in percent of net income attributable to shareholders adjusted for noncash income mainly from the updated measurement of the put/call rights relating to the acquisition of the stake in Porsche AG indirectly held by Porsche SE, as well as the remeasurement of the existing stake held at the contribution date

37 Volkswagen Group continues to outperform in key markets (Growth y-o-y in deliveries to customers, January to August 2013 vs. 2012) World Car Market: 4.0% Volkswagen Group: 4.5% bf Car Market VW Group Car Market VW Group Car Market VW Group Cars + LCV 8.9% 10.9% -3.4% -5.2% North America Car Market VW Group Western Europe Car Market VW Group 17.4% 9.3% -5.5% -2.8% Central & Eastern Europe Car Market VW Group 16.2% 6.7% -1.3% -10.8% South America Rest of World Preliminary figures, incl. Volkswagen Commercial Vehicles and Porsche (since 08/12); excl. Scania and MAN Asia Pacific

38 Volkswagen Group Solid performance of passenger car brands (Deliveries to customers by brands, January to August 2013 vs. 2012) 000 units +4.5% January August ,000 January August ,173 5,906 6,000 5,000 4, % 3,722 3,838 3,000 2,000 1,000 0 Volkswagen Group +7.2% 961 1, % % % % 358 Preliminary figures, excl. Scania and MAN. Porsche AG fully consolidated as from 1 August 2012 (since 08/12)

39 Volkswagen Group Outlook 2013 Deliveries to customers (million vehicles) + 5.4% We expect deliveries to customers to increase y-o-y. sales revenue to exceed the prior-year figure. Sales revenue ( billion) + 3.5% positive effects from our attractive model range and strong market position. We have the goal Operating profit ( billion) % Jan - Jun Full Year to match the prior-year s level of operating profit in 2013, even with an ongoing uncertainty in the economic environment. This applies equally for the Passenger Cars Business Area, the Commercial Vehicles / Power Engineering Business Area and the Financial Services Division.

40 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 and emerging markets presence Realization of cost savings, toolkit modularization and localization of products Creation of sustainable value Continuous improvements in internal combustion engines Leadership in alternative powertrain technologies 25 percent less energy and water consumption, waste and emissions in Group production Trucks and buses a highly attractive strategic business area Create an integrated truck company with commitment of Volkswagen Significant synergies arising from cooperation All business areas and brand-specific features remain untouchable Brand implementation 2) Fully consolidated as from 1 August ) Consolidated as from 19 July 2012

41 Volkswagen Group: Financial sustainability on core strengths Hans Dieter Pötsch Member of the Board of Management, Volkswagen Aktiengesellschaft Volkswagen Investor Day, Frankfurt, 9 September 2013