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Volkswagen resilient despite COVID-19 as it posts $12bn profit

Suban Abdulla
·2-min read
EVANSTON, IL - SEPTEMBER 22:  A sign marks the location of a Volkswagen dealership on September 22, 2015 in Evanston, Illinois. The Environmental Protection Agency (EPA) has accused Volkswagen of installing software on nearly 500,000 diesel cars in the U.S. to evade federal emission regulations. The cars in question are 2009-14 Jetta, Beetle, and Golf, the 2014-15 Passat and the 2009-15 Audi A3. As many as 11 million cars worldwide could be affected by the deception.  (Photo by Scott Olson/Getty Images)
Automotive net cash flow was about €6bn, the company said in a trading update on Friday. Photo: Scott Olson/Getty Images

Volkswagen (VOW.DE) announced that a robust recovery in the second half of 2020 despite the coronavirus pandemic.

Full-year operating profits adjusted for the diesel-emissions scandal at the German carmaker, came in at around €10bn ($12.2bn, £8.9bn), compared with €19.3bn in 2019.

Automotive net cash flow was about €6bn, the company said in a trading update on Friday.

Sales at VW increased 1.7% in December, while new car registrations by the sector as a whole in Europe fell nearly 4%, European Automobile Manufacturers’ Association data showed.

“The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020,” Volkswagen said.

Shares in the company were up 1.2% at €177 on the news.

Chart: Yahoo Finance
Chart: Yahoo Finance

READ MORE: Volkswagen faces EU fine for missing emission targets

The news comes as the world’s largest carmaker faces an EU fine after falling short of targets for cutting its cars’ CO2 emissions.

The German carmakers said on Thursday that it had cut average emissions for its fleets across Europe by about 20% over the past year compared with 2019.

“We narrowly missed the fleet target for 2020, thwarted by the COVID-19 pandemic,” said Herbert Diess, CEO of the Volkswagen Group in a statement.

The average vehicle’s CO2 emissions have been brought down to 99.8 grams per kilometre, according to the company, just 0.5g short of the fleet target.

The company is due to report detailed full-year earnings and provide guidance for 2021 at the end of February.

VW, like its rivals in the automative industry faces several challenges due to COVID-19, including a global shortage of chips needed for production.

Last week, figures from the Society of Motor Manufacturers and Traders (SMMT) showed that the number of new cars sold in the UK fell by almost a third last year due to the fallout from the coronavirus pandemic and uncertainty over Brexit.

New car registrations totalled 1.63m in 2020. It marked the the lowest total since 1992 and the biggest year-on-year fall — around 29% — since 1943. The 680,076-unit decline was equivalent to £20.4bn ($27.8bn) in lost turnover for the industry.

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