Financial Positions

Financial position in the Group

The Volkswagen Group generated gross cash flow of €26.5 billion in fiscal year 2014, up 8.8% on the prior-year figure. Funds tied up in working capital increased by €4.0 billion to €15.8 billion due to volume-related factors and a stronger performance by the financial services business. As a result, cash flows from operating activities amounted to €10.8 billion (€12.6 billion).

At €16.5 billion, the Volkswagen Group’s investing activities attributable to operating activities in the reporting period were up 10.2% on the previous year. Investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) increased to €12.0 billion (€11.4 billion), while capitalized development costs rose to €4.6  billion (€4.0 billion). Net cash flow amounted to €−5.7 billion (€−2.3 billion).

Cash inflows from financing activities amounted to €4.6 billion (€9.0 billion). Net liquidity was increased by the hybrid notes successfully placed in March 2014 (€3.0 billion) and the capital increase implemented in June 2014 by issuing new preferred shares in the amount of €2.0 billion. Conversely, dividend payments and the increase in the interest in Scania resulted in cash outflows.

The Group’s net liquidity amounted to €−96.5 billion on December 31, 2014, compared with €−82.3 billion as of year-end 2013.

Financial position in the Automotive Division

The Automotive Division’s gross cash flow amounted to €20.2 billion (€18.7 billion) in fiscal year 2014. The year-on-year increase was primarily due to earnings-related factors. €1.4 billion was released from working capital, slightly less than in the previous year (€1.9 billion) due to volume-related factors. Cash flows from operating activities increased by €1.0 billion to €21.6 billion.

At €15.5 billion, investing activities attributable to operating activities were down overall on the prior-year figure (€16.2 billion). Capex rose to €11.5 billion (€11.0 billion), producing a capex ratio of 6.5% (6.3%). We invested mainly in our production facilities and in models that we launched in 2014 or are planning to launch in 2015. These are primarily vehicles in the Golf, Passat, Touran, Audi A3, Audi A4, Audi TT, Audi Q7, ŠKODA Fabia and ŠKODA Superb series, as well as the Porsche Macan and the Porsche Panamera. Other investment priorities were the ecological focus of our model range, the growing use of electric drives and our modular toolkits. Capitalized development costs were up on the 2013 figure, at €4.6 billion (€4.0 billion). Investment activities in the reporting period included MAN SE’s sale of MAN Finance International GmbH to Volkswagen Financial Services AG. In the previous year, they included the intragroup acquisition of the interest in LeasePlan Corporation N.V.

The Automotive Division’s net cash flow improved by €1.7 billion to €6.1 billion.

A capital increase carried out by Volkswagen AG at Volkswagen Financial Services AG at the beginning of the year in order to finance the growth in business volumes and meet regulatory capital requirements resulted in outflows from financing activities of €2.3 billion. The purchase price for the Scania shares acquired – reported as a capital transaction with noncontrolling interests – was recognized in the amount of €6.5 billion. The successful placement of dual-tranche hybrid notes with an aggregate principal amount of €3.0 billion via Volkswagen International Finance N.V. in March resulted in a cash inflow. They consist of a €1.25 billion note that carries a coupon of 3.750% and has a first call date after seven years, and a €1.75 billion note that carries a coupon of 4.625% and has a first call date after twelve years. Both tranches are perpetual and increase equity by the full amount, net of transaction costs among other factors. €3.0 billion of the hybrid notes was classified as a capital contribution, which increased net liquidity. The capital increase implemented in June by issuing new preferred shares in the amount of €2.0 billion also had a positive impact.

The dividend paid out to the shareholders of Volkswagen AG rose by €0.2 billion to €1.9 billion.

Overall, the Automotive Division recorded a cash inflow from financing activities of €−7.9 billion (+€1.7 billion), which also includes a year-on-year decrease in proceeds from the issuance of bonds.

Net liquidity in the Automotive Division as of December 31, 2014 was €0.8 billion higher than in the previous year, at €17.6 billion.

Gross cash flow in the Passenger Cars Business Area amounted to €18.0 billion in fiscal year 2014, 9.7% higher than in the previous year due to earnings-related factors. Funds released from working capital rose to €2.7 billion (€1.8 billion). Cash flows from operating activities increased by 13.3% to €20.6 billion. At €13.9 billion, the cash outflow from investing activities attributable to operating activities was down on the previous year (€14.8 billion), which was affected by the intragroup acquisition of the interest in LeasePlan. Capex and capitalized development costs rose to €10.1 billion (€10.0 billion) and €4.0 billion (€3.6 billion), respectively. Net cash flow increased by €3.3 billion to €6.7 billion.

Gross cash flow in the Commercial Vehicles/Power Engineering Business Area was €2.2 billion, down slightly on the prior-year figure. Funds of €1.3 billion were tied up in working capital due to the difficult market conditions in South America and Eastern Europe. By contrast, funds of €0.1 billion had been released from working capital in the previous year. Cash flows from operating activities declined to €0.9 billion (€2.4 billion). Investing activities attributable to operating activities increased year-on-year to €1.5 billion (€1.4 billion). The increase was due in particular to capital expenditures on the successor model to the Volkswagen Crafter. Net cash flow amounted to €−0.6 billion, down €1.6 billion on the prior-year figure.

Financial position in the Financial Services Division

The Financial Services Division’s gross cash flow rose by 11.7% year-on-year to €6.4 billion due to improved earnings quality. Funds tied up in working capital increased to €17.2 billion (€13.7 billion) due to growth in business volumes. Mainly because of increased capex and the intragroup acquisition of MAN Finance International GmbH from MAN SE, investing activities attributable to operating activities recorded a cash outflow of €1.0 billion. In the previous year, the sale of the interest in LeasePlan to Volkswagen AG had led to a cash inflow. Volkswagen AG contributed a €2.3 billion cash inflow into the financing activities of the Financial Services Division to finance the increased business volumes and to strengthen equity. The cash inflow in the financing activities amounted to €12.6 billion (€7.2 billion) overall, including from the issuance of bonds. The Financial Services Division’s negative net liquidity, which is common in the industry, amounted to €−114.1 billion (€−99.2 billion) at the end of the reporting period.