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== Earnings Call Summary == | == Earnings Call Summary == | ||
Here is a summary of Volkswagen's Q4 2023 earnings call transcript; | |||
=== 2024 Outlook === | |||
* They expect global vehicle sales to slightly increase in 2024. | |||
* Aim to gain market share in North America and sustain their position in Europe. | |||
* They expect to lose market share in China in line with their value-over-volume strategy. | |||
* They expect the price/mix to benefit from a number of product launches. | |||
* They expect lower material prices and product costs in 2024. | |||
* They see first psoitive effects from the execution of their performance programs in 2024. | |||
* However, they expect significant ramp-up costs for new models, continued upfront investments in their battery business and China Joint Ventures and rising BEV share, which dilutes their profitability. | |||
* They expect sales revenue to grow by 5% y/y. | |||
* They forecast operating margin before special items of between 7% and 7.5%. | |||
* They forecast automotive net liquidity of between 39 and 41 billion euros in 2024. | |||
*'''CFO Antlitz said they are currently experiencing temporary headwinds, in particular , from supply constraint at selected Audi Models ( six and eight cylinder models) and a significant amount of new product launches across all brand groups over the coming two years. But they expect to catch up in the course of the year, specifically in the second half.''' | |||
* 2024 will mark a record year in product launches. They plan to launch not less than 30 new models across the brands. Half of these new models will be combustion hybrid versions and the other one, electric (Q&A). | |||
* '''2024 will be ambitious in terms of volume since they will be phasing out old models and introducing new models. However, from 2025 they see greater opportunities with volume (Q&A).''' | |||
* '''The new models will come with more content eg Macan will have 8% more content; hence they will be able to lift prices.''' | |||
* Deliveries outlook is not a relevant factor for them. | |||
* '''They expect a weaker Q1 due to mdel launches and supply constraint at Audi.''' | |||
* '''Antlitz said when they say revenue growth of up to 5% it would be best to take the midpoint of that, which would imply a cautious outlook. 'It's much better ti rather plan with a cautioned top line and not overpace it," he said.''' | |||
* Antlitz said they reversed the headwind from hedging losses. | |||
=== Markets === | === Markets === | ||
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* They advanced their ICE market share in China in 2023. | * They advanced their ICE market share in China in 2023. | ||
* Their proportionate operating result held up well at 2.6 billion euros in 2023. | * Their proportionate operating result held up well at 2.6 billion euros in 2023. | ||
* '''They expect the BEV market to remain highly competitive in 2024 as they transition to new energy vehicles. This will affect their profitability in the short term, hence they expect the proportionate operating profit in the range of EUR 1.5 billion and EUR 2 billion in 2024.''' | *'''They expect the BEV market to remain highly competitive in 2024 as they transition to new energy vehicles. This will affect their profitability in the short term, hence they expect the proportionate operating profit in the range of EUR 1.5 billion and EUR 2 billion in 2024.''' | ||
* '''Their ICE business in China is facing some margin pressure but is healthy overall.''' | |||
* '''From today to 2026, they will make sound compromises between margin and volume, hence they are prepared to give up BEV market share in the next 2 years but from 2027 they want to pick up market share significantly.''' | |||
==== Europe ==== | ==== Europe ==== | ||
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* Blume said the strong growth of BEV deliveries in 2023 (+35%) and upcoming launches of some highly attractive, new BEV models make them confident that they will be able to grow their BEV share also in 2024 (2023:10%). | * Blume said the strong growth of BEV deliveries in 2023 (+35%) and upcoming launches of some highly attractive, new BEV models make them confident that they will be able to grow their BEV share also in 2024 (2023:10%). | ||
* Blume said the Audi Q6-etron and the new Porsche Macan (the first models based on the PPE platform) are ready for market launch. | * Blume said the Audi Q6-etron and the new Porsche Macan (the first models based on the PPE platform) are ready for market launch. | ||
* They are getting a very positive response to the product they are launching right now. The Macan has received an order intake of over 10,000 units in the first weeks. | |||
=== Operating performance in 2023 === | === Operating performance in 2023 === | ||
* Oliver Blume said volume was the main growth driver in 2023 but price and product mix also contributed as well. | * Oliver Blume said volume was the main growth driver in 2023 but price and product mix also contributed as well. | ||
* Passenger Cars Business recorded an operating profit of 9.5 billion euros. 7 billion was due to strong volume growth, 2 billion was due to pricing while mix was slightly positive. | * Passenger Cars Business recorded an operating profit of 9.5 billion euros. 7 billion was due to strong volume growth, 2 billion was due to pricing while mix was slightly positive. | ||
* Overall contract volume for the Financial Services was stable while the credit loss ratio was largely unchanged versus 2022 despite a worsened macroeconomic environment. | * Overall contract volume for the Financial Services was stable while the credit loss ratio was largely unchanged versus 2022 despite a worsened macroeconomic environment. | ||
* Financial Services operating income fell by a third to 3.8 billion euros, reflecting normalized used car prices and provisioning for residual value risk and higher interest rate levels. | * Financial Services operating income fell by a third to 3.8 billion euros, reflecting normalized used car prices and provisioning for residual value risk and higher interest rate levels. | ||
=== | === Strategy === | ||
* They | |||
* | * They plan to leverage both partnerships and vertical integrations , depending on how useful it's to have each. For instance, they chose both vertical integrations and partenerships when it comes to developing and producing batteries (50% in-house and 50% with partners). Their decision is based on speed, quality and know-how. They are now focusing on single partners instead of many small partners (Q&A). | ||
* They | * Blume said they are capable of building trucks (Q&A). | ||
* They | * They are convinced the future will be electric and will continue to invest accordingly(Q&A). But in the mean time, they will keep their combustion engine cars competitive to be flexible, that's, invest in the last generation. | ||
* | * They will still pursue to Scout project despite other players pulling back due to soft sales (Q&A). This is because the C-pickup segment and B-SUV segment in the U.S is turning electric and that's a big opportunity for them. They are the most promising segments in terms of profit pools. | ||
* | * They do M&A planning for like 4 to 5 years ahead but in the magnitude of EUR 2 to 3 billion y/y. | ||
* | |||
* They expect | === 2023 set goals === | ||
* They | * CEO Oliver Blume said they implemented and delivered along the 2023 defined measures. | ||
* | * He said that the 2023 results are the first testimony that their Top-10 programs are having an impact. | ||
* | * Blume said the clean-up work (restructuring) has been completed. | ||
* | * They budgeted for a 700 million euro headwind associated with early retirement (Q&A) in the Brand Group Core but that is already captured in the margin guidance (6-7% in 2024 and 8% in the medium term). | ||
=== Investment Planning === | |||
* Blume said their investments are oriented towards the most attractive profit pools. | |||
=== 2025 CO2 Compliance in Europe (Q&A) === | |||
* They expect from EU politics a clear orientation. | |||
* Regarding the CO2 2025 compliance, they have strong products offensive. | |||
* They will leverage products to avoid the CO2 2025 payments. | |||
* The ramp-up of electrification in Europe is factored into their long-term margin gudance. | |||
* The many products that are coming in the second half of 2024 will give them a tailwind for 2025. | |||
=== Tariffs (Q&A) === | |||
* They don't know what will happen in the U.S in terms of tariffs. | |||
* Blume said they are in favor of a free world trade and they are concerned of rising protectionalism. | |||
=== Xinjiang Plant Audit (Q&A) === | |||
* Blume said they haven't seen any evidence of the forced labor. | |||
* They are considering further steps together with their partner, in terms of economic evaluation since they are concerned about continued media reports. | |||
* Blume said the firm is very small, only has 200 people compared to VW's more than 680,000 people. | |||
== Competitor Results and Expectations == | == Competitor Results and Expectations == |