Volkswagen Ag Unsp/Adr

Good day, ladies and gentlemen, and welcome to the Volkswagen AG live audio webcast and conference call on the first half year financial results 2020. For your information, today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Helen Beckermann, Head of Group Investor Relations for Volkswagen AG. Please go ahead.

Ladies and gentlemen, welcome to Volkswagen's conference call for investors and analysts on the results for the period January to June 2020, based on the half-year report we published early this morning. For today's conference call, I'm delighted to be joined by Frank Vitter, member of the Board of Management, Volkswagen AG, responsible for finance and IT, and also interim board member for group components and purchasing, and also director of group sales, Dr. Christian Dahlheim. Most of you will have followed the webcast from this morning's press conference. Our focus now is to cover your specific needs as investors and analysts. Following the presentations, we look forward, as always, to taking your questions. So let me now hand you over to Frank.

Thank you, Helen, and a warm welcome to all participants on this call. First and foremost, we sincerely hope that you and your families are remaining healthy during these ongoing, unprecedented times. We have now all had a couple of more months' experience in dealing with COVID. As you can see from our H1 performance, it was a difficult second quarter, but we are seeing definite signs of recovery and normalization. We have spoken quite a bit with you guys during the last quarter, and I mentioned ugly in our meetings. Q2 was difficult, but it did come in somewhat better than originally anticipated as months by months the recovery progressed. In parallel, we have pushed the organization to its limit. I'm personally quite happy with our crisis management and the outcome achieved so far. We provide for a safe working environment, and in areas like working capital management and fixed cost reduction, we have moved the needle significantly. Before we dive into the details of H1, I feel it necessary to address an important point. I would like to talk about the recent management developments and organizational changes. I'm probably the first one to admit that the structure within our organization is quite complex to most of our peers. It is never easy to balance the interests of all stakeholders. especially when you keep in mind the magnitude of change and the consequences involved in such a transformation like the one the entire industry is going through. Of course, it is unacceptable that so much internal information is leaking outside, since this clearly does not help our progress. I've said on many occasions that rumblings and smoke coming from Wolfsburg is a clear sign of necessary and somewhat difficult negotiations. The most important message is that the Board of Management and the Supervisory Board are aligned in what we need to accomplish together and that Haberdies is in the driver's seat in order to execute our strategy. Believe me, there has been no change in its level of ambition and push for improvement. In relation to the recent changes we've made in several key positions within the group, in an organization the size of ours, from time to time it becomes necessary to make those management changes. As our strategy evolves, focus areas shift, certain roles develop further, and different competencies are required. With the new management team, we are confident that we will deliver what's required. At the very same time, we would like to thank the colleagues who left their positions, and we are very grateful for their lasting contribution. I would now like to talk about dividend. We have already seen our press release from this morning. We have announced that the AGM will take place on September 30th as a virtual meeting. We have also communicated a revised proposal for the dividend payout relating to the business year 2019. I would like to shed some light on this. In our view, very balanced decision. This decision has not been driven by any lack of financial robustness. Over the last two years, we have focused on delivering consistent results and improving our performance. However, this year we are still operating in an unprecedented situation and no one can argue that COVID has disappeared. It is still extremely difficult to make reliable forecasts, will really predict the severity and duration of the crisis and the subsequent levels of sustainable recovery. The now proposed €4.80 per ordinary share and the €4.86 per preference share corresponds to the same absolute level as the payout last year and equates to a dividend payout of slightly over 18%. We also propose to the AGM that the remaining retained profits of 855 million euros will be carried forward to a new account. Without any doubt, ladies and gentlemen, we still remain fully committed to our strategic target of at least 30% payout ratio as soon as this becomes feasible. Now let's shift our focus back to the H1 performance. As you are well aware, customer demand was heavily impacted in Q2. Our deliveries to customers saw severe declines in all regions and were in total down around 1.5 million units year-on-year. The knock-on effect caused revenue to decline by over 23% year-on-year to slightly above 96 billion euros. The operating result before special items came in at minus 0.8 billion euros. Impacts from the measurement of fair values of derivatives and exchange rate effects are included within this figure. For the first half of the year, the fair value of commodity derivatives had a negative impact of 0.7 billion euros. and currency translation also burdens the result by a further €0.2 billion. On the other hand, a one-off windfall profit of around €0.8 billion relating to the Fort Argo transaction was booked. This was due to the fact that the transaction value of AID at closing, which was incorporated into the joint venture, was significantly higher than the book value. In Q2, it was necessary to book special items of negative 0.7 billion euros, the entire amount being related to the diesel issue and related legal risks. The equity result for the six-month period, mainly relating to our Chinese joint ventures, was 1.2 billion euros, reflecting the proportionate operating profit of 1.4 billion euros. For the six-month period, profit before tax came in at negative 1.4 billion euros. The reported automotive net cash flow came in at negative 4.8 billion euros. Clean net cash flow was negative 2.3 billion euros, taking 1.6 billion diesel outflows and around 0.9 billion cash out for M&A activities into account. Automotive net liquidity amounted to a very robust 18.7 billion euros. I will take you through the details in a very few minutes. Before that, let's take a closer look at the sales side, so I hand you over to Christian.