Volkswagen has announced a significant reduction in its dividend for 2024, attributing this move to a notable decline in profitability. This downturn is largely driven by increased extraordinary expenses and the pressures of a 'challenging competitive environment.' For the financial year ending December 31, 2024, the renowned German automaker recorded attributable earnings amounting to 10.72 billion euros, a decrease from the previous year's figure of 15.95 billion euros.
Conversely, the company did see a slight uptick in revenue, which rose to 324.66 billion euros compared to 322.28 billion euros, as stated in a detailed release on Tuesday. One of the primary concerns highlighted by Volkswagen involves a sharp rise in fixed costs. The company reported net extraordinary expenses totaling 2.6 billion euros primarily linked to restructuring efforts.
Additionally, significant costs included 900 million euros allocated for selective severance agreements aimed at streamlining its workforce, alongside 1.6 billion euros dedicated to restructuring initiatives at its Audi Brussels facility in Belgium. The competitive landscape within the automotive sector has further exacerbated pressures on profitability. Despite challenges, Volkswagen's revenue growth appears to be significantly propelled by its financial services unit, which saw sales surge to 58.77 billion euros, up from 54.13 billion euros.
In contrast, the automotive division experienced a decline in sales revenue, which fell to 265.89 billion euros from 268.16 billion euros, despite the achievement of higher unit sales for passenger vehicles. Analyzing the market area breakdown, Europe, along with other markets, contributed the most to sales with a total of 194.15 billion euros.
This was followed by North America, Asia Pacific, and South America, showcasing diverse performance across global standings. "In a challenging competitive environment, we achieved a decent overall financial performance in 2024," stated Chief Financial Officer and Chief Operating Officer Arno Antlitz.
He further emphasized, "In 2025, we will continue to focus on consistent implementation. As our transformation gains in traction, the new strength of Volkswagen Group comes to life. Our continuing model offensive, regionally tailored products for our markets around the globe, and strong partnerships constitute the basis for sustainable positive development," added Chief Executive Officer Oliver Blume. The company’s board has proposed a dividend of 6.30 euros per ordinary share and 6.36 euros per preferred share for the period, marking a decrease from 9 euros and 9.06 euros the previous year.
Looking forward, Volkswagen anticipates a modest 5% increase in sales revenue for 2025, with an expected operating return on sales ranging between 5.5% and 6.5%. Analysts from RBC Capital Markets commented on Volkswagen's results, noting they were stronger than anticipated alongside an optimistic outlook for 2025.
"The release suggests the upper end of the EBIT guidance range. The better guide is being led by Core, which is a good sign for VW. Progressive is coming in below but Sport generally in line to slightly ahead. The guide excludes impacts from US tariffs but also positive impacts from the CO2 rule change," the research firm elaborated. Considering market responses, Volkswagen's stock saw an increase of more than 3% during midmorning trades, signaling potential optimism among investors..