Volkswagen reported its biggest annual loss in almost eight decades of history on Friday as the growing cost of provisions for the global emissions scandal pushed Europe’s largest carmaker into the red.
VW almost tripled its provision for the costs of fixing cars to €16.2 billion, a day after announcing the biggest car buyback proposal in history. The provision includes “pending technical modifications and customer-related measures as well as global legal risks.”
For 2015 it reported a net loss of €1.6 billion - its first net loss since 1993 – versus a profit of €10.8 billion in 2015. Analysts expected a loss of €2.6 billion.
VW admitted in September to equipping 11 million cars worldwide with test-cheating software and on Thursday a US court accepted the outlines of a plan to repurchase – or offer to fix – 480,000 cars in the US, where the scandal was uncovered.
On Friday, VW postponed the release of a comprehensive investigation of the emissions scandal being undertaken by Jones Day, which it hired in September.
The carmaker had been expected to release the study by the end of this month, but because of the amount of research involved, and a criminal investigation by the US Department of Justice, VW said it won’t be complete until the fourth quarter of 2016.
Volkswagen said it regretted the decision but that a disclosure now would “significantly impair Volkswagen’s co-operation with the US Department of Justice and weaken Volkswagen’s position in any remaining proceedings.”
The DoJ sued VW in January, on behalf of the US Environmental Protection Agency, for installing test-cheating software and then concealing facts about it afterwards.
“After a thorough examination of the legal situation, the supervisory board and the management board of Volkswagen have nevertheless had to recognise that a disclosure of interim results of the investigation at this point in time would present unacceptable risks for Volkswagen and, therefore, cannot take place now,” the company said.
Matthias Müller, who became chief executive weeks after the Environmental Protection Agency made the emissions problem public last September, said that, were it not for the scandal, 2015 would be “another successful year overall.”
Overall revenue last year rose 5.4 per cent to €213 billion. Operating profit rose slightly to €12.8 billion, but because of provisions the result was an operating loss of €4.1 billion.
“The current crisis - as the figures presented today also reveal - is having a huge impact on Volkswagen’s financial position,” he said. “Yet we have the firm intention and the means to handle the difficult situation we are in, using our own resources.”
Stuart Pearson, an analyst at Exane BNP Paribas, said: “The most important point to note is that the provision now covers the total costs of the diesel emissions scandal, including criminal.
“This is important . . . and should bring VW one step closer to becoming ‘investable’ again.”
He added that the company had not set aside money to cover the shareholder claims “as it sees these as zero”.
Copyright The Financial Times Limited 2016