Financial Position - Volkswagen Group Annual Report 2021 (2024)

Financial position of the Group

In the period from January to December2021, the VolkswagenGroup generated gross cash flow of €43.7(35.0)billion. The increase compared with the previous year was largely attributable to the improvement in profit. In comparison with the previous year, which had been impacted by the pandemic, a decrease in inventories and receivables, a rise in lease assets and higher liabilities took the change in working capital to €−5.1 (−10.1)billion. Cash outflows attributable to the diesel issue were lower than in fiscal year2020 and included the inflows from the agreements regarding the settlement of damages. As a result, cash flows from operating activities grew by €13.7billion to €38.6billion.

The VolkswagenGroup’s investing activities attributable to operating activities increased by €5.8billion to €24.2billion in the reporting period, particularly due to the acquisition of Navistar for an amount of €2.6billion (net of the cash funds acquired), the capital increase and acquisition of shares in Gotion High-Tech in an amount of €1.1billion and a rise in capitalized development costs.

Financing activities accounted for total cash outflows of €−7.8billion. Financing activities related primarily to the redemption of the hybrid note called in the first quarter of 2021, the dividend paid to the shareholders of VolkswagenAG and the issuance and redemption of bonds, as well as to changes in other financial liabilities. In the prior-year period, there had been a cash inflow of €7.6billion to boost gross liquidity by placing hybrid bonds and issuing the green bond.

At the end of the reporting period, the VolkswagenGroup reported cash and cash equivalents of €39.1(33.4)billion in its cash flow statement.

At the end of December2021, the VolkswagenGroup’s net liquidity stood at €−136.6billion, compared with €−137.4billion at the end of2020.

Financial position of the Automotive Division

The Automotive Division recorded gross cash flow of €29.0billion in fiscal year 2021, which exceeded the prior-year figure by €5.4billion due to earnings-related reasons. The change in working capital amounted to €3.4(1.1)billion. The rise of €2.3 billion compared with the previous year, which had been impacted more severely by the Covid-19 pandemic, was due to increases in liabilities and in other provisions, offset by a smaller decline in inventories.

In the reporting period, cash outflows attributable to the diesel issue were lower than in the previous year. This applies even if the inflows from the agreements regarding the settlement of damages are not taken into account. Consequently, cash flows from operating activities were up €7.7billion on the previous year, to €32.4billion.

Investing activities attributable to operating activities increased by €5.4billion to €23.8billion. Within this figure, investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) decreased by €0.6billion to €10.5billion. Thanks to higher sales revenue and a decline in capital expenditure, the ratio of capex to sales revenue was down on the prior-year figure, at 5.1(6.1)%. A considerable portion of capex was allocated to our production facilities and to models that we launched in 2021 or are planning to launch in 2022, or for which production is set to start. These are primarily vehicles in the ID. family and the new Taigo model, the Multivan T7, the next generation of the ŠKODA Fabia as well as the Enyaq, CUPRA Born, Audi Q4 e-tron, Audi A8, new model variants in the Bentley Bentayga and Flying Spur series, and the Porsche Taycan and the Porsche Macan. Other investment priorities include the electrification and digitalization of our products and our modular toolkits and platforms. Additions to capitalized development costs rose to €7.8(6.5)billion in the reporting period. The “Acquisition and disposal of equity investments” item (M&A) expanded by €4.7billion to €5.9billion as a result of strategic investments in a number of companies, in particular Navistar, the associates GotionHigh-Tech and Northvolt, and the joint venture Argo AI. In the prior-year period, this item had included the sale of the shares in Renk.

Despite the investment in Navistar (€−2.6billion), the Automotive Division’s net cash flow of €8.6billion in the period from January to December2021 was €2.3billion higher than the comparative figure for2020.

In the reporting period, the financing activities of the Automotive Division resulted in a cash outflow of €−7.4billion; in the prior-year period, there had been a cash inflow of €2.9billion to boost gross liquidity through measures such as the placement of hybrid notes and the issuance of the green bond. The redemption of the hybrid note called in the first quarter of2021 led to a cash outflow of around €−1.2billion. A dividend totaling €2.4billion was paid to the shareholders of VolkswagenAG in July2021. Financing activities also include the issuance and redemption of bonds and changes in other financial liabilities. The “Transactions with noncontrolling interests” item includes the present value of the cash settlement for MAN noncontrolling interest shareholders in connection with the merger of MAN and TRATON; the settlement was paid at the beginning of September2021. In the prior-year period, the transfer of all outstanding Audi shares to VolkswagenAG had been reported in this item.

At the end of the reporting year, the Automotive Division’s net liquidity was €26.7billion, compared with €26.8billion on December31, 2020. With net liquidity almost unchanged and a noticeable increase in sales revenue, the Automotive Division’s net liquidity as a proportion of consolidated sales revenue declined to 10.7(12.0)% in the reporting period.

Financial position in the Financial Services Division

In fiscal year2021, the Financial Services Division generated gross cash flow of €14.6(11.3)billion. The increase was mainly attributable to improved earnings. The change in working capital amounted to €−8.4 (−11.1)billion. A reduction of receivables and inventories were set against a rise in lease assets and led to a decrease in funds tied up in working capital compared with the prior-year period. Cash flows from operating activities went up by €6.1billion to €6.2billion.

Investing activities attributable to operating activities expanded to €0.4(0.0)billion. The “Acquisition and disposal of equity investments” item went up in the reporting period as a result of strategic investments in a number of companies.

The Financial Services Division’s financing activities relate primarily to the issuance and redemption of bonds and other financial liabilities; there was a total cash outflow of €−0.4billion in the reporting period. In the previous year, financing activities had accounted for cash inflows of €4.7billion.

At the end of 2021, the Financial Services Division’s negative net liquidity, which is common in the industry, was €−163.3billion, compared with €−164.2billion on December31, 2020.