Volkswagen, 30 new models and flexibility. But the share price falls
The group stated that it started 2024 'with a clearly positive trend' compared to 2023. Profits expected to fall for jvs in China
5' min read
Key points
5' min read
Attempted show of strength with a 170 billion investment plan (-10 billion over planned, savings) between 2025 and 2029. Pounce on product offering: 30 new products, probably too many. Reassurance on flexibility, pushing the plug-in hybrid, in the face of a market that at this stage does not reward the transition to the battery-electric car to the desired extent. Not to mention increasingly fierce competition and profit estimates, especially in China. So the Volkswagen Group is looking at the current year without enthusiasm: revenue growth of up to 5% and only a slight improvement in margins. The share price, inevitably, ends up in an air pocket: -4.45% in today's session. But the problem does not start today: -23% since one year and -58% from the highs of three years ago, in the post-Covid period. It is trading at less than four times earnings. Toyota, the only peer in terms of size and global reach, is at 10 times, recalls the Wsj. Stellantis, which has long traded at a discount to even Vw, is now valued at five times earnings after an excellent 2023. Today Volkswagen is only the ninth largest group in the world by capitalisation, just behind Ferrari.
Meanwhile, the Wolfsburg-based company posted a net profit of EUR 17.9 billion in 2023 (+13.1%) and an operating profit, before extraordinary items, of EUR 22.6 billion in line with 2022 on revenues that grew 15% to EUR 322.3 billion. Again the Wsj points out that net profit is not what it seems. Roughly speaking, Toyota expects to post a 50% higher net profit for the financial year to March, even though it only sold 20% more vehicles than Vw in 2023. And again, sales volumes were up 12% with 9.24 million vehicles delivered. The return on sales, before extraordinary items, is 7%, not brilliant if you look, for example, at the double-digit figure for Stellantis. 'In 2023,' commented CEO Oliver Blume at the annual press conference, 'we have created a solid foundation. We are aware of the current challenges and are tackling them rigorously in order to exploit the enormous potential of the Volkswagen Group. With exciting products, a consistent strategy and a clear focus on implementation, we look forward to the financial year 2024 with confidence'.
The Board of Directors will propose to the shareholders' meeting the distribution of a dividend of EUR 9 for ordinary shares and 9.06 for preference shares, representing an increase of EUR 0.30 for both categories of securities compared to a year ago. The dividend distribution corresponds to a payout of 28 per cent. Vw with AP Möller-Maersk and Equinor is one of the three European companies with the highest dividend yields in their respective stock portfolios, according to a Janus Henderson study.
Thirty new models and a warning from China
.Europe's leading carmaker expects orders for its vehicles in Western Europe to receive a boost in the coming months from a record 30 new models, including battery electrics.
The Wolfsburg-based group, which recently launched the new electric flagship of the VW brand, the ID.7, said it had 'started the new year with a clearly positive trend' compared to the beginning of 2023. For the whole year, the share of battery electric vehicles (Bev) reached 8.3 per cent, a new record. In absolute terms, the German giant delivered 771,100 Bevs last year, which corresponds to a 35% increase over 2022, driven by growth in all regions. The Group confirmed its European leadership in this segment.
