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Wolfsburg, 2012-03-12

Volkswagen Group presents record results for 2011

• Sales revenue up 25.6 percent to €159.3 billion
• Operating profit grows by over half to €11.3 billion
• “Strategy 2018” is working – ecological restructuring launched
• Dynamic start to the year – deliveries up 7.7 percent in the first two months
• Growth in deliveries and sales revenue expected for 2012, plus operating profit at
   high prior-year level

The Volkswagen Group again reported record vehicle sales, sales revenue and earnings in 2011 and is confident about its prospects for 2012. “The Volkswagen Group has extended its string of unbroken successes in 2011. We are making steady progress on our way to pole position in the automotive industry”, said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, on Monday during the presentation of the Company’s 2011 financial results.

The Volkswagen Group clearly beat its ambitious goals in fiscal year 2011, setting new records for vehicle sales, sales revenue and earnings. The Group made progress both quantitatively and qualitatively: more than 8 million vehicles sold for the first time, the highest product quality and customer and employee satisfaction were coupled with sound finances and a steady increase in profitability. The diverse model portfolio was again expanded by fascinating new vehicles, and the Group occupied new, high-growth segments.

For 2012, Winterkorn is convinced that Volkswagen’s broad global positioning and unique diversity of brands, vehicles and services mean that the Company has what it takes to outperform its competitors. “Our Strategy 2018 is working. We remain on track on our way to the top of the automotive industry”, said Winterkorn.

CFO Hans Dieter Pötsch was also satisfied with developments in 2011: “We have further increased our profitability and impressively demonstrated the robustness of our Group.” The Volkswagen Group has established a strong position and its sound finances mean that it is well prepared for the future: “Expanding our production capacity in growth markets will help to reinforce our position there and improve the quality of our earnings.” In light of the still very volatile global economic environment and the associated uncertainty, the Volkswagen Group will systematically continue its strategy of disciplined cost and investment management with a view to further increasing its profitability and thus its competitiveness.

Group figures for 2011

The Volkswagen Group’s sales revenue increased by 25.6 percent in the past fiscal year to €159.3 billion (previous year: €126.9 billion). Consolidated operating profit rose to a record €11.3 billion, an improvement of €4.1 billion compared with 2010. Volume, mix and price effects were the strongest drivers (€5.9 billion). In addition, product cost savings of €1.1 billion had a positive effect. The negative effect of €2.6 billion arising from fixed costs and depreciation and amortization expense was primarily attributable to the Group’s growth and to development costs related to the expansion of the Volkswagen Group’s product portfolio. The operating margin improved from 5.6 percent to 7.1 percent.

The consolidated operating profit does not include the Group’s €2.6 billion (€1.9 billion) proportional share of the operating profit of the Chinese joint ventures. These companies are included using the equity method and are therefore reflected in the financial result, which rose by €5.8 billion to €7.7 billion last year.

All in all, the Volkswagen Group’s profit before tax last year rose by around €10 billion to €18.9 billion. At €15.8 billion (€7.2 billion), the after-tax profit is also a record.

In light of this highly encouraging performance, the Board of Management and the Supervisory Board are proposing to the Annual General Meeting on April 19, 2012 to increase the dividend per ordinary share to €3.00 (€2.20) and the dividend per preferred share to €3.06 (€2.26).

The return on investment in the Automotive Division increased significantly last year to 17.7 percent (13.5 percent), which is both considerably higher than in the previous year and above the Company’s own 9 percent minimum required rate of return. The Financial Services Division improved its return on equity from 12.9 percent to 14.0 percent. “The figures impressively demonstrate that we have systematically increased our operating profitability while maintaining our investment discipline”, said CFO Pötsch.

At €17.0 billion (year-end 2010: €18.6 billion), net liquidity in the Automotive Division remained at a high level compared with the previous year. The change includes the acquisition of Porsche Holding Salzburg, the increase in the stake in MAN SE and the equity investment in SGL Carbon SE, totaling some €7 billion, as well as the increase in investments in property, plant and equipment to around €8 billion. “Financially, we are on the right track. Volkswagen entered 2012 with a sound net liquidity position. This continues to give us the necessary financial flexibility for our investments and to implement our Strategy 2018”, said Pötsch.

The ratio of investments in property, plant and equipment (capex) to sales revenue rose only slightly by 0.6 percentage points to 5.6 percent. In addition to production facilities, Volkswagen invested mainly in expanding its model range and modularizing its vehicle concepts. “We will continue to invest in our forward-looking product portfolio with prudence and appropriate cost discipline”, underscored Pötsch.

Brands and business fields

The Volkswagen Group substantially outperformed the market in the past fiscal year and recorded growth in all key regions, despite being faced with difficult conditions in volatile markets. Group deliveries climbed 14.7 percent to 8.3 million vehicles – surpassing the figure of eight million vehicles for the first time. Thanks to these outstanding sales figures, the Volkswagen Group’s global share of the passenger car market rose from 11.3 percent to 12.3 percent. All Group brands generated a clear increase last year and outperformed the market in most cases.

The Volkswagen Passenger Cars brand is and remains a powerful driver. At 5.1 million cars in 2011, brand deliveries to customers exceeded the five million mark for the first time, a rise of 13.1 percent on the prior-year figure. The brand’s operating profit rose by 74.7 percent to €3.8 billion (€2.2 billion). In addition to the increase in sales, this was mainly due to mix improvements and savings in materials costs.

Audi remained in the fast lane. 2011 was the most successful year in the company’s history, with deliveries of 1.3 million vehicles (1.1 million). Profitability was also at a record high. Operating profit climbed by 60.1 percent year-on-year to €5.3 billion (€3.3 billion). In addition to the better model and country mix and the increase in vehicle sales, Audi benefited from continuous improvements in productivity and processes.

Czech manufacturer ŠKODA also hit new heights in 2011. Deliveries increased by 15.3 percent to 879,000 vehicles (763,000). The brand recorded substantial growth in Russia, India and China in particular. Operating profit climbed by 66.1 percent to €743 million (€447 million).

SEAT continued to make progress in 2011. At 350,000 vehicles, deliveries to the Spanish brand’s customers were up 3.1 percent on the prior-year figure (340,000). The operating loss narrowed by a substantial €86 million to €225 million thanks to an improved sales performance and optimized materials costs.

The continued recovery of the luxury segment lifted the Bentley brand in 2011. Deliveries increased by 36.9 percent to 7,003 vehicles (5,117). The British brand was back in the black with an operating profit of €8 million (previous year: operating loss of €245 million). The higher volume and mix improvements also had a positive impact.

Volkswagen Commercial Vehicles can also look back on a successful year. Deliveries increased by 21.4 percent to 529,000 vehicles (436,000). Operating profit improved by €217 million to €449 million (€232 million). This was due to higher sales and lower materials costs.

Swedish truck manufacturer Scania increased deliveries by 25.7 percent to 80,100 trucks and busses (63,700). Operating profit rose by 2.3 percent to €1.4 billion (€1.3 billion).

MAN, the commercial vehicles, engines and mechanical engineering company, delivered 24,750 trucks and busses in the period from November to December and generated an operating profit of €193 million. Volkswagen held 59.58 percent of the company’s voting rights and 57.33 percent of its share capital as of December 31.

Volkswagen Financial Services generated an operating profit of €1.2 billion in 2011, up from €932 million in the previous year, again making it a key success driver for the Group. The Division signed 3.1 million new finance, leasing and insurance contracts worldwide, an increase of 16.2 percent compared with the previous year.

Strategy and outlook

“Our Group’s success is built on solid and above all broad foundations” said Winterkorn. The volume goal of ten million vehicles is in sight, the Group’s global market share has risen by 2.7 percentage points since 2007 and its return on sales before tax has climbed from 6.0 percent in 2007 to 11.9 percent last year. Without the nonrecurring effect from the remeasurement of the put/call options relating to Porsche Zwischenholding GmbH, the figure for 2011 would be 7.8 percent. The long-term target is to achieve a return on sales of at least 8 percent.

The Group’s “Strategy 2018” combines business success and financial strength with responsible conduct towards customers, employees, the environment and society. “We want to make Volkswagen the most ecological automaker in the world”, said Winterkorn. To achieve this goal, he said that the Volkswagen Group had launched a fundamental ecological restructuring. The goal is that, by 2015, the Group’s European new vehicle fleet should emit less than 120 grams of CO2 per kilometer for the first time. To achieve this aim, each vehicle generation should be an average of 10 to 15 percent more efficient, while efficiency technologies such as start-stop systems are to be rolled out as a standard in all new models. Production efficiency in the 94 Group plants is to become 25 percent more environmentally friendly by 2018, among other things as a result of €600 million of investments in renewable energy. Winterkorn: “We want to and will make the Volkswagen Group a beacon for the automotive industry.”

On the road to this goal, the Group is cautiously optimistic for 2012 – despite all the economic uncertainties. The Volkswagen Group increased global deliveries by 7.7 percent in the first two months, handing over approximately 1.3 million vehicles (excluding MAN and Scania) to customers. The Volkswagen Group will also be able to approach the coming months with confidence, Winterkorn said. “Above all, because this year, we will again be launching more than 40 additional new models, successors and product enhancements across the Group.” These include important new vehicles such as the Audi A3 and the Golf. “As a result, we expect to increase deliveries to customers year-on-year”, Winterkorn said. 2012 will be dominated by the start of production for new, high-volume models as part of the renewal of the Group’s product range and the need to convert plant and equipment to use with the Modular Transverse Toolkit.

The Volkswagen Group’s 2012 sales revenue will exceed the prior-year figure. This will also be a result of the consolidation of MAN SE as of November 9, 2011; the earnings contribution will be limited because of the write-downs that will be required for purchase price allocation.

The goal for operating profit is to match the 2011 level. Positive effects from the attractive model range and strong competitive position will be offset in part by increasingly stiff competition in a challenging market environment, especially in certain European countries. Disciplined cost and investment management and the continuous optimization of processes therefore remain core components of Volkswagen’s “Strategy 2018”.

Further information on the Annual Media Conference and Investor Conference is available from www.volkswagen-media-services.com and www.volkswagenag.com/ir.


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