Volkswagen:Quarterly Results/2023 Q2: Difference between revisions

Volkswagen:Quarterly Results/2023 Q2 (view source)

Revision as of 18:20, 27 July 2023

4,815 bytes added , 27 July 2023

→‎Summary of the earnings call

VisualWikitext

Aron

Administrators

6,294

edits

@@ Line 34: / Line 34: @@
 * Volkswagen noted that there were notable signs of recovery in China deliveries towards the end of the reporting period and that the group continues to see soid demand in general.<blockquote>“We have strategically realigned and restructured the Volkswagen Group, with a clear plan and measurable milestones. In the first half of the year, the Volkswagen Group delivered reliably with very solid results. Sales in North America are picking up, we are strengthening our position in China through technological partnerships and on top of that the trend for fully electric vehicles is moving in the right direction. '''What is important to us is long-term, sustainable growth, with a focus on value over volume''',” CEO Oliver Blume said.</blockquote><blockquote>"'''The focus for the second half is now on strengthening net cash flow.''' With the launch of performance programs at all brands and our strategic decisions in China, we will improve the competitive position of the Volkswagen Group even further,” CFO Arno Antlitz said.</blockquote><blockquote>“'''As anticipated, supply chain disruptions have continued to ease in H1 2023, with pressure shifting from semiconductor shortages to transportation and logistics delays. H2 should be supported by lower raw material costs and gradually easing logistical bottlenecks''',” the press statement stated.</blockquote>
-== Summary of the earnings call ==
+== Summary of the H1 2023 earnings call ==
+=== China ===
+* '''Aims to reduce development time of new products and technologies by around 30%.'''
+* Partnerships with local tech companies will enable them to speed up time to the market.
+* Local product partnerships will lead to tailored and superior ICV product offerings soon.
+* Entered into partnership with Xpeng, a tech leader in  Chinese ICV segment and smart ICV tech capabilities.
+* Volkswagen acquired strategic minority investment of 4.99%.
+* Products developed by Xpeng will expand its MEB portfolio. Oliver added that the cooperation will result in '''development and procurement cost savings of up to 20% for both companies.'''
+* Audi deepened partnerships with JV partners, FAW and SAIC.
+* Oliver said that ICV market in China is experiencing intense competition, hence partnership with Xpeng will enable them to consolidate their leadership position.
+* '''Audi FAW NEV company will start production of PPE vehicles(e-models) for China by the end of 2024.'''
+* Partnerships will not result in increased in investments(beyond the 180 billion euros planned)-Q&A
+* '''Already built CARIAD in China with quite success-'''Q&A'''.'''
+* '''Its Tech Co in Anhui(with 2,000 employees) will producing NEVs next year-'''Q&A'''.'''
+* Operating result and margin of FAW JVs is stronger than SAIC-Q&A.
+* CFO Arno said, "'''Volkswagen Group is more under pressure in the current pricing environment in China."''' -Q&A.
+* Despite the partnership, Volkswagen aims to increase competitiveness of its MEB platform with Horizon Robotics, with in-car entertainment with Thundersoft and next generation battery, which result in reduced cost-Q&A.
+=== Deliveries ===
+* Deliveries grew by 13% y/y to 4.4 million vehicles in H1 2023.
+* Order book stands at around 1.65 million vehicles in Western Europe(200,000 are BEVs).
+* Sold 322,000 battery electric vehicles in H1(or 7.4% of deliveries).
+* Order intake of BEVs in Europe is at 200,000 vehicles and is expected to improve as availability of BEVs and delivery times improve in H2.
+* '''Saw a slower development of European BEV market due to reduce incentives and purchasing power but have seen improvement in order intake since May and expects the trend to continue.'''
+=== Financials and operating results ===
+* Vehicle sales grew 11% y/y to 4.4 million vehicles in H1 but excluding China, vehicle sales grew by 20% y/y to 3.1 million vehicles.
+* FX headwind of 2%.
+* Revenues grew 18% y/y to €156 billion, due to strong vehicle sales in Europe and North America coupled with favorable pricing.
+* '''Recorded operating profit of €11.3 billion and a margin of 7.3% due to hedging effect of -€2.5 billion(H1 2022: hedging effect of -€0.9 billion). Excluding hedging, operating profit was €13.8 billion and operating margin was 8.9%(includes €0.4 billion Forex losses from liquidation of Russia business and headwinds from raw materials).'''
+* '''Expects logistics issues which affected net cash flow to improve in H2.'''
+* '''Volkswagen financial services recorded operating profit of  €2.2 billion due to normalization of used cars and changed interest rate environment.'''
+* "Pricing continued to be healthy and mix turned even slightly positive in Q2."
+* Arno Antlitz noted, "At Financial Services, we saw an overall '''stable contract volume, slightly lower financing contracts were compensated by more leasing and insurance contracts. Credit loss ratio remained stable at the prior year level despite the worsened macroeconomic environment."'''
+* Volkswagen Group China operating profit was €1.15 billion(-18% y/y) but within their FY23 target of €2.8 billion(-15% y/y).
+* '''Not pleased with the free cash flow. But that was due to R&D and Capex investments as well as the fact that a lot of funds are tied up in inventories due to logistics issues-'''Q&A.
+* Took down delivery target because of the run rate in China-Q&A.
+* Positive on the product cost for thr full year-Q&A.
+* Expects operating margin in H2 to be better than H1 because they have to meet the target range of 7.5%-8.5%-Q&A.
+=== ID.2 model ===
+* ID.2 not the final model, they are still improving-Q&A.
+* Feedback from customers and retailers is positive-Q&A.
+* Will feature the MEB platform-Q&A.
+* Haven't decided to bring smaller cars yet.
+* MEB platform will also feature in SKODA and CUPRA models as well, with a price range of €25,000 and positive profitability.
+=== Ecosystems ===
+* The framework agreement that they have with Xpeng gives them the opportunity to go out of China-Q&A.
+* Their objective is to have partnerships tailored for each region-Q&A.
+=== Leverage for managers to hit their targets ===
+* Adapt management compensation to the targets-Q&A.
+* Competition between the brands-Q&A.
+* Bringing enterpreneurship mindset to the brands.
+*
 == Subsidiary results and estimates ==