Interactive Investor

ii view: Volkswagen shapes 2024 as year of new vehicle launches

Shares in this iconic vehicle maker have underperformed Germany’s DAX index over the last year. We assess prospects.

13th March 2024 15:37

Keith Bowman from interactive investor

Full-year results to 31 December

  • Revenue up 15% to €322 billion
  • Adjusted operating profit flat at €22.6 billion
  • Final dividend up 3.4% to €9 per share

Guidance:

  • Sales for full-year 2024 expected to grow by around 5%

Chief executive Oliver Blume said:

"In 2023, we have established a solid foundation. We are aware of our current challenges and are tackling them rigorously in order to leverage the enormous potential of the Volkswagen Group. With inspiring products, a consistent strategy and a clear focus on implementation, we are looking forward to the 2024 financial year with confidence. The Volkswagen Group is entering the long-distance race of transformation from a position of strength.”

ii round-up:
 
German automotive giant Volkswagen AG (XETRA:VOW) today pointed to a potential record year ahead for new models, with more than 30 new product launches planned. 

Expected sales growth of up to 5% in 2024 is down from the 15% achieved in 2023 at €322 billion, but with an accelerated ramp-up expected from 2025 onwards.

Volkswagen shares fell 4% in post results European trading having come into this latest news down by close to a fifth over the last year. That compares to more modest movement for rivals Mercedes-Benz Group AG (XETRA:MBG), Ford Motor Co (NYSE:F), and Tesla Inc (NASDAQ:TSLA), and is in contrast to a one-fifth gain for Germany’s DAX index. 

Producing vehicles in almost 30 countries globally, VWs are sold in more than 150 different countries.

Vehicle deliveries in 2023 rose 12% to 9.24 million, with demand for battery electric vehicles (BEV) up by just over a third to 771,000 units. 

2024 product launches are expected to include hybrid and electric upgrades to its Golf, Tiguan, Passat, and Octavia models, along with completely new all-electric versions of the Audi Q6 and CUPRA Tavascan. 

Profit in 2023 remained flat at €22.6 billion with vehicle volume and price increases countered by higher production costs and negative currency headwinds. 

A final ordinary dividend of €9 is up from €8.70 per share last year. A first-quarter trading update is scheduled for 30 April.  

ii view:

Started in 1937 and headquartered in Wolfsburg, Germany, Volkswagen today operates across the two divisions of automotive and financial services. Its vehicles range from motorcycles to supercars and heavy trucks. Group brands include VW itself, Audi, Skoda, Seat, Cupra, Lamborghini, Scania and Ducati. It also retains a major shareholding in stock market listed Porsche Automobil Holding SE Vorz-Inhaber-Akt stimmrechtslos (XETRA:PAH3)

For investors, elevated borrowing costs continue to pressure consumer spending, with the economic outlook remaining uncertain. Sales in China remain particularly tough and competitive, VW’s own costs and efficiency remain a focus for management, while rivals such as Bayerische Motoren Werke AG (XETRA:BMW) and General Motors Co (NYSE:GM) are not standing still. 

On the upside, a 10-point efficiency improvement plan is ongoing, and the diversity of its brands helps to even out the ups and downs of each. New and upgraded models should also appeal to consumers, while a forecast dividend yield of over 6% is generous. 

In all, and given the strength of its brands, this global automaker looks to remain deserving of a place in diversified and long-term focused share portfolios. 

Positives: 

  • Strong brand names including Audi and Volkswagen
  • Attractive dividend yield (not guaranteed)

Negatives:

  • Uncertain economic outlook
  • High EV competition

The average rating of stock market analysts:

Buy

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