Volkswagen beats forecasts in 2018 despite dieselgate scandal

Volkswagen’s sales of 10.8 million vehicles around the world from its 12 brands brought in €235.8 billion. (Reuters)
Updated 12 March 2019

Volkswagen beats forecasts in 2018 despite dieselgate scandal

  • Selling 10.8 million vehicles around the world from its 12 brands brought in €235.8 billion
  • ‘We performed very well in spite of strong headwinds,’ chief executive Herbert Diess said in a statement

WOLFSBURG, Germany: Mammoth German carmaker Volkswagen reported Thursday growing profits and revenues in 2018, beating analysts’ forecasts despite enormous charges linked to its “dieselgate” emissions cheating scandal and headwinds from tough new pollution tests.
The Wolfsburg-based group said it boosted its bottomline 6.0 percent year-on-year to $13.7 billion (€12.15 billion), higher than expectations from analysts surveyed by Factset.
Selling 10.8 million vehicles around the world from its 12 brands brought in €235.8 billion, with revenues posting slower growth than profits at 2.7 percent.
And operating, or underlying profit added just 1.0 percent, to €13.9 billion.
“We performed very well in spite of strong headwinds,” chief executive Herbert Diess said in a statement.
One major burden was the WLTP emissions tests, introduced since VW’s 2015 admission that it manipulated millions of cars worldwide to appear less polluting.
The new process’ introduction in September cost VW almost one billion euros by slowing production, a spokesman said, with the effect visible in a fourth-quarter operating result 4.2 percent lower year-on-year, at €3 billion.
Meanwhile the group notched up €3.2 billion in special items to cover costs relating to “dieselgate,” the same as the previous year.
A sizeable chunk of the costs came in Germany as VW paid a group-wide fine of €1 billion, while high-end subsidiary Audi had to forfeit 800 million euros.
Since 2015, legal costs, fines, buybacks, and refits to affected cars have cost VW €29 billion, the group said.
Looking ahead, VW said it had expanded its plans for a vast array of electric models over the coming decade to 70 rather than 50, aiming to sell 22 million battery-powered cars by 2028.
It hopes the offensive will help it meet strict new carbon dioxide emissions requirements in the European Union.
“The share of electric vehicles in the group fleet is to rise to at least 40 percent by 2030” with Korea’s LG, Samsung and SK Innovation and China’s CATL providing the vital battery cells to power the drive.
“Volkswagen is also taking a close look at possible participation in battery cell manufacturing facilities in Europe,” it added.
On a closer time horizon, VW aims for “slightly” higher unit sales this year than in 2018, with revenues “as much as 5.0 percent” higher and an operating profit margin of between 6.5 and 7.5 percent — up from 5.9 percent last year.


Saudi Aramco sets IPO share price between 30-32 riyals

Updated 51 min 9 sec ago

Saudi Aramco sets IPO share price between 30-32 riyals

  • Saudi Aramco intends to buy $1 billion worth of shares for employee

DUBAI: Saudi Aramco’s multibillion-dollar initial public offering (IPO), probably the biggest in history, shifted to full gear as its share price was announced and subscription to the world’s biggest oil company commenced on Sunday.

Saudi Aramco set an indicative share price between 30 and 32 riyals for the 1.5 percent of its oustanding shares – or about 3 billion shares of its 20 billion regular shares – that it would offer for the domestic part of its public offering. The blockbuster IPO could be worth least $24 billion, and values the state-owned oil giant at up to $1.71 trillion.

The offering – or book-building – period for institutional subscribers, which started today, closes on December 4 while the retail offering for individual investors will begin on November 21 and will end on November 28. Individual investors will subscribe based on a price of 32 riyals, the top end of the price range, the company noted in a document.

The final pricing for the Aramco shares would be announced on December 5, and Saudi Tadawul  – the Kingdom’s stock exchange – would make an announcement when initial trading day would be, the company added.

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For more of our coverage of the Aramco IPO, click here.

To view key Aramco IPO documents, click here.

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Samba Capital & Investment Management Company has been designated as issue manager while National Commercial Bank, Saudi British Bank, Samba Financial Group, Saudi Investment Bank, Alawwal Bank, Arab National Bank, Albilad Bank, Aljazira Bank, Riyad Bank, Al Rajhi Bank, Alinma Bank, Banque Saudi Fransi and Gulf International Bank were named as receiving banks.

If there are applications for more than the 0.5 percent on offer — amounting to 1 billion shares — allocations to private investors will be scaled back proportionate to demand; if there are fewer applications than the 0.5 percent when all maximum applications are satisfied, private investors can have the over-payment refunded either in cash via the receiving banks or in the form of extra shares in Aramco.

There is an incentive mechanism in the IPO whereby Saudi investors will receive a bonus one-for-ten allocation of shares, up to a maximum of 100 shares, if they do not sell shares in the market for a period of six months after dealings begin in December, at a date still to be determined.

Saudi Aramco also intends to buy $1 billion worth of shares for employees under a plan to incentivize executives and staff members alongside the IPO next month.

The plan — which was disclosed in the IPO prospectus — will involve Aramco buying the shares from the government and making them available for employees under special terms.