Volkswagen Ag Unsp/Adr

Good morning, everybody, and welcome to our annual media conference of the Volkswagen Group here out of Wolfsburg, and it's great to have you here today. And for those of you who are joining us online, welcome to you as well. Now we're here at Autostadt, which is a place that embodies like no other what our company stands for. Strong brands, iconic products, and a clear vision for the mobility of tomorrow. For the Volkswagen Group, 2025 was a year of progress. We brought exciting products to the people. translated technology into real customer benefits. We streamlined our structures, reduced costs and further improved our governance. So strong brands and strong products. We're not only convincing our customers, but also the experts in the sense that we are winning prestigious awards. We're setting historic records. Now recently, for instance, with the golden steering wheel, and in 2025 also we were named the world's most innovative automotive group. So, in short, the new strength of the Volkswagen Group was put on the road in an environment that is radically changing which places unprecedented challenges to our entire industry with increasing geopolitical tensions and trade policy barriers and massive pricing pressure in key markets. We've worked flat out to make ourselves fit for the future, to further strengthen our competitiveness with consistency, with discipline and pragmatism. With around 9 million vehicles delivered in 2025, we were almost at the previous year's level, and Europe remains our strong base here in our home market. Our position is now stronger than ever, and that happens at a time when we operate also in an extremely dynamic environment. We have posted a 4% increase in sales and market share of over 25%, and we've grown our leading position here with ICEs and electric vehicles. Now, what is particularly positive is that BEV sales in Europe rose by 66%, so with a share of 27%, we're the clear market leader here. Five out of the 10 best-selling all-electric models here in Europe come from our group. Now, in particularly challenging markets like North America, minus 10%, and China minus 8%, the deliveries declined as expected. Now, very positive for us, on the other hand, was South America with an increase of 12%, and Asia, excluding China, came with an increase of 9%, and the Middle East and Africa posted an increase of 10%. Flexibility in terms of drive types is proving to be a global strength today. We have efficient internal combustion engines, advanced hybrids, and sustainable all-electric vehicles. The Volkswagen Group's revenue amounts to €322 billion, almost reaching the previous year's level. Operating profit stands at €8.9 billion, which is significantly less than in the previous year, but the decline is largely due to special effects and tariffs. And at the same time, we see that our comprehensive standardized performance programs are taking an effect for our brands, for our companies, for our regions. And this has also allowed us to significantly and sustainably strengthen the cost structure of our company. And thanks to this major progress in cost reduction, were we able to offset a significant part of the global headwinds. The direct and indirect effects of US tariffs alone amounted to around 5 billion euros. Additionally, there are significant one-off expenses for restructuring and special effects relating to our brands, and those were then recorded as one-off effects in 2025. At 5.5% our operating performance before special items and tariffs is at the lower end of our original forecast at the beginning of the year. This is also despite further unjustified effects like changed market conditions in China, the drop of vehicle sales due to tariffs on Mexico-produced cars, and substantial expenses related to the technological transformation of our company. All of this underscores the effectiveness, but also the necessity of our programs. Net cash flow in the automotive division reached 6.4 billion euros. And thanks to the excellent work of our teams, this is up 1.3 billion on the previous year. This has enabled us also to consolidate net liquidity at a very stable level of around 34.5 billion euros. At the Annual General Meeting in June, the Board of Management and the Supervisory Board will propose a dividend of €5.26 per preferred share for the 2025 financial year. The fact that the capital market is gradually rewarding our approach is also reflected in the share price. Volkswagen preferred shares rose by around 16% in 2025, and during the same period, the stock's Europe Automobile and Parts Automotive Industry Index declined by 4% in the capital market. Including our dividend for shareholders, this has meant an increase in value of 24%, and that is a positive trend for the Volkswagen Group in an environment that was anything but easy. for our industry and all of this happens in the midst of a phase of profound restructuring, realignment and transformation. Arno Antlitz will also explain the details of the financial figures to you in a moment. We achieved a great deal in 2025 with our clear strategy, consistent implementation, and above all, a team that works on this every day with determination, with ambition and passion. But it's also clear that this was far from enough. We still have a lot of work ahead of us. The global conditions are undergoing a comprehensive, a fundamental realignment. Familiar certainties of the past are disappearing. So our business model of the past also no longer works. So against this backdrop, it is crucial for our success to further expand our regional activities as well. At the same time, we will need to tap global synergies even more. And we've already begun to do this with our In China For China strategy. We're growing our global footprint, we're becoming more independent, and we're also taking advantage of local opportunities, and we're increasing our resilience. So, ladies and gentlemen, you see that we're heading in the right direction. The strong fourth quarter has already shown a noticeable improvement in performance. We are now also seeing the first effects of the restructuring. Through our wage agreements and personnel measures alone, we have already achieved cost savings of around 1 billion euros at Volkswagen, Audi, Porsche and Carriot in 2025. remain solidly focused on our goal by 2030 we plan to achieve annual cost savings of more than 6 billion euros through the future packages alone. Our Volkswagen brand has developed positively and it is stabilizing the overall result. We have exciting products such as the new T-Roc which has made an excellent start on the market But we're also continuing now to pick up the pace. The electric urban car family is in the starting blocks as we speak. It will expand our entire electric portfolio from the entry-level segment with the ID Polo all the way to the ID7. Audi is reinforcing its claim to Vorsprung durch Technik with a complete realignment which encompasses all areas of the company. It has iconic design, leading technologies, innovative manufacturing approaches, and this is how the concept C show car now points the way forward for the brand. And at the same time, also Audi is currently in the midst of the company's largest model push across all driveline types. Porsche's sales volume in the largest single markets of China and the USA are exported exclusively from Europe. And therefore Porsche finds itself in a particularly challenging situation with the massive changes in the market conditions. It's also why the company was realigned in 2025 and despite those new conditions Porsche remains one of the strongest companies in the industry with the financial adjustments. For the entire Volkswagen group, we are working to achieve an operating return on sales of 8% to 10% by 2030, and this is an ambition that's higher than our target levels in the past. Why? Because the economic environment has changed dramatically. With our extensive restructuring program and the realignment of the last three years, we have put our group on a robust footing. And we have delivered in doing so. We have achieved some of our goals earlier than planned. And everything really is geared towards our top 10 programs in the group and the brands which apply to products, to technologies, software regions. mobility services, sustainability and of course financial performance. But at the same time our world has changed dramatically over the last three years with market structures, trade policy barriers and extensive regulation in the world's regions and basically our own costs which are still too high, especially in Europe. And that is why we are currently working on a transformation plan for the next phase of our company. Now, this we call the Volkswagen Group 2030 vision, focusing on revising our business model under the new conditions. We plan to further develop our product portfolio, which will be specifically tailored to the regions of the world and the respective profit pools we have in those markets. We are refocusing our technology, battery and software roadmap, and we also look to further improving our financial structure and generally making the Volkswagen Group more efficient. And throughout the course of the year, we will provide information about our next steps. This year will be one where we will continue to bring our innovative strength to bear in our products and technologies with a model push of more than 20 new vehicles with a real highlight, the electric urban car family. It is more than just a model series. It is an expression of the Volkswagen Group's expertise and capabilities. We're talking here about four models, three brands, all sitting on one platform. We first presented it as a complete family at the IAA Motor Show, and now we're putting it on the road. Electric mobility at an entry-level price. It comes with top technologies from higher vehicle segments. Volkswagen, Cupra, and Skoda are thus tapping into a growth segment with great potential. In just a few weeks, the Cupra Revolve will celebrate its world premiere, and you can look forward to it, just like we do. And there will be many other fully electric vehicles, such as the Audi E3 CUV or the Porsche Cayenne Electric, so a real BEV push across all the segments. And at the same time, we're also continuing to accelerate in China. After less than three years of transformation now, we're in full delivery mode. By 2027, We will launch around 30 electrified models in the Chinese market together with our local partners. We've accelerated development times by up to 30%. We have also reduced our material costs on the local CMP platform by more than 40%. So we will transfer this experience to other regions of the world. In technology terms, we're already taking now the next decisive steps. In our joint venture between Carriot and Horizon Robotics, which we call Corizon, we're developing our first group-owned AI chip for the next generation of intelligent connected vehicles, and therefore a powerful, energy-efficient, and AI-supported system of automated driving. Batteries remain the key technology for e-mobility, and we are increasingly taking this into our own hands. We launched our Cell Factory and Cell Skitter in September, and that stands for technology know-how, industry expertise, and control along the entire value chain. With the introduction of LFP cell technologies, we're also expanding our technology spectrum and strengthen our competitiveness in the volume segment. And the same is true for software. We are making rapid progress. We launched the zonal China electric architecture. We brought it into serious production in just 18 months. At the same time, our joint venture with Rivian Volkswagen Tech is off to a very good start. It's fully on schedule, and together we are now developing the next STV architecture for the Western Hemisphere. It will then be used for the first time in the ID Everyone from 2027. Our software subsidiary Carriot has been technically restructured, has been reorganized, is significantly streamlined now. It focuses on cross-functional tasks and is much more powerful. Our standards remain high. We want to be the global automotive tech driver, and we're continuing on this path resolutely we know where we want to go we know what needs to be done and we have the strength of a strong team behind us colleagues around the world work to make progress possible day in day out with great expertise with a lot of passion and genuine team spirit I would like to thank our teams for what they have achieved over the past year, also on behalf of the entire Board of Management. Our focus now for 2026 is clear, strong products, compelling technologies, delighted customers, as in the past, strict cost discipline, not as an end in itself, but as a prerequisite for investment in the future, for growth and a successful development of our company. We have made important progress, that is clear. General conditions are once again more challenging And we're continuing to adapt to them. We're acting with foresight. We remain focused. And we're seizing our opportunities. And there will be many more of these in 2026. Thank you very much. Arno, the stage is yours.

Ladies and gentlemen, 2025 was quite a challenging year. It was marked by geopolitical tensions, by tariffs and very intense competition. In this demanding environment, we have made major progress and continue to strengthen the substance of the Volkswagen Group. For our customers, we have launched 30 attractive models to the market, and we have made visible progress with our restructuring plans, and we obtained a solid net cash flow. Thus, we kept net liquidity at a solid level. I would like to thank all of the employees for this success they have worked on. Compared to the previous year, we have improved important key indicators. Our operating result, however, went down by about 50%. The current level of results at 4.6%, adjusted by special effects, is not enough in the long term to keep investing vigorously into the future. This shows that in this challenging environment, we have to continue to strictly reduce costs, open up group synergies, and reduce complexity, thus bringing our profitability to a higher level, and sustainably so. After these preliminary remarks, please let me put the figures into context. We'll be starting by looking at our deliveries. Despite the multiple challenges, we delivered about 9 million vehicles worldwide to our customers in 2025. This is almost at previous year's level. Declines in deliveries in China and the United States were balanced by two-digit growth rates in South America and by growth in Europe. The renewal of our product portfolio is therefore increasingly paying off. The deliveries of battery electric vehicles grew by 32%, thus the share of battery electric cars is increased to 11% of global deliveries. The greatest impetus came from Europe. The share of electric car deliveries in Europe stands at around 19%. Nowadays, every fourth electric vehicle sold in Europe comes from the Volkswagen Group. This shows, quite impressively, our electric strategy is working. Group sales revenue went down slightly to around 322 billion euros, mainly due to currency effects. The operating result of 8.9 billion euros was 53% below the previous year. This corresponds to a return of 2.8%. The result shows the intensive competition in our industry. However, 2025 also saw major special effects. In total, there were special effects of about 5.9 billion euros. The lion's share results from Porsche goodwill impairment to the tune of 2.7 billion euros and from the adaptation of the Porsche product strategy coming in at around 2 billion euros. Restructuring costs meant another 1.3 billion euros. Adjusting the margin for these items results in a more precise picture of the operating performance of the Volkswagen Group in 2025. Before these effects, the operating return on sales stands at 4.6%. This number is a good indicator for where we stand in the current environment. Deducting tariffs as well, which led to costs of 2.9 billion in the last nine months of 2025, we end up with a margin of 5.5%. Against the backdrop of the numerous challenges, this is quite an achievement. But of course, it is the result achieved which counts in the end. The tariffs are here to stay, and a margin of 4.6% is not enough for vigorous investment into the future. In order to permanently strengthen Volkswagen's resilience in a difficult market situation, we have to implement the current improvement programs consistently, and we have to step up our efforts. The net cash flow in the Group Division Automotive grew to a total of 6.4 billion euros. Cash flow improvement was the result of targeted initiatives that were implemented since last summer all over the Group. The net cash flow of 6.4 billion euros mainly came from a strong second half of the year and in particular from the fourth quarter, which was marked by an improved management of our inventories and a high level of capex discipline. We can quite rightly be proud of the good work of our teams in the branch and in the divisions. With their work, they have made a decisive contribution in order to strengthen the financial performance of our group. Ladies and gentlemen, in order to create transparency and counter the unfounded speculation of recent weeks, I would like to take this opportunity to explain in a bit more detail how we achieve this net cash flow. The diagram shows you the individual components of the net cash flow in 2025 in a simplified fashion. Basis is gross cash flow. which in 2025 stood at 28.7 billion euros. This gross cash flow results in the cash flow of ongoing operations plus changes in working capital, which are mainly changes in inventories and also receivables and liabilities. When we build up inventories, this ties up money. When we reduce stocks, additional money comes into the till. From the cash flow from ongoing operations, we have to pay in capex for capitalized R&D costs as well as for M&A activities such as Rivian, for example. Thus, we end up at the net cash flow figure. The absolute figures for 2025 are only of limited significance. which is why we have compared them with the figures we achieved in 2024, and you see them on the left below the pillars. These changes compared to previous year are shown on the right-hand side. Due to weaker operating business, gross cash flow in 2025 was 6.7 billion lower than that in 2024, against the backdrop of tariffs, considerable uncertainty, we reduced our forecast for net cash flow in September subsequently to zero. In order to decisively counteract this development, we have set up a group-wide task force with the aim to reduce expenditure and optimize inventories. And our teams have delivered. In terms of working capital, a positive amount of 2.7 billion euros was achieved for the full year of 2025. Previous year's figure was negative at minus 1.1 billion euros. The majority of the improvement in working capital compared with previous year amounted to around 2 billion euros. It came from lower inventories at the end of the year. I'm going to talk about that later on. Thanks to strict expenditure discipline, capital expenditure on property, plant and equipment was also reduced by 1.9 billion. Lower capitalized research and development expenditure contributed 1.2 billion. And we spent 1.1 billion euros less on M&A activities. Overall, measures such as inventory optimization, investment discipline, lower R&D expenditure, and lower expenditure in M&A supported the net cash flow with 6.2 billion euros, and thus almost completely offset the lower cash inflow from weaker operating business. The majority of the improvement came in the fourth quarter. So, as already mentioned, main change in working capital came, as mentioned, from the reduction of inventories. Now, reduction of inventories in the fourth quarter is nothing unusual. In 2024, the seasonal effect was further supported by sustainable structural improvements between production, logistics and sales. Let me give you an example. During the chip shortage our plants found it difficult to meet exact delivery dates for customers. we simply did not know whether we had all the parts available. For this reason, the vehicles were built with a long lead time so that they would definitely be available to dealers on time when the customer's leasing contract expired and customers come back into the dealerships. With improved adherence to delivery dates in our plants, we were able to shorten vehicle throughput times across the entire value chain to dealers in 2025, thereby reducing inventories without compromising vehicle availability for our customers. In total, we were able to reduce inventories in the fourth quarter of 2025 vis-à-vis third quarter by 4.8 billion and by 2 billion compared to the end of 2024. Supported by the positive development of net cash flow, we were able to maintain net liquidity at a solid level of 34.5 billion. Let's now come to the performance of the individual divisions. In the automotive division, the realignment of Porsche, US tariffs and restructuring had a particularly strong impact. As a result, the segment recorded an operating profit of only 5 billion euros. This represents a decline of 64% compared with the previous year. For heavy commercial vehicles, lower sales volumes in particular weighed on earnings. Operating profit fell by 43% to 2.4 billion euros. Financial services increased its operating profit by 19% to 3.7 billion euros, driven primarily by a strong business in Europe. Let's now take a look at the operating profit in passenger cars like commercial vehicles in the income statement reconciliation with the previous year. Effects become pretty clear then. Volume had a slightly positive effect. The successful ramp-up of... Electric vehicles, which currently still have lower margins in Europe, came at a price. Negative price and mixed effects had a negative impact of around 3.2 billion, or one percentage point on the margin. The burden of US tariffs cost us around another percentage point of margin. In terms of fixed costs, the burdens associated with the realignment of Porsche had a negative effect, as described. By contrast, we were able to reduce operating fixed costs compared with 2024. Here, the consistent implementation of our performance programs is increasingly beginning to pay off. As a result, overheads in the automotive division fell by 1.5 billion euros. The Volkswagen grant in particular made an important contribution to this. So, let's look at the development of the brand groups. Significant progress was made in the brand group core. Sales volume and revenue increased in a difficult market environment driven by the successful ramp-up of fully electric vehicles. Despite the negative impact of tariffs and weaker margins of electric vehicles operating, performance remains stable. The result amounted to 6.8 billion euros, the margin of 4.7% is roughly on par with the previous year. Skoda's outstanding performance has a positive impact here. With a margin of 8.3%, the brand Skoda impressively demonstrates what can be achieved when a strong product substance based on the Volkswagen platform is combined with competitive cost structures. The Volkswagen brand has also made substantial progress. This was particularly evident in the fourth quarter. Earnings remained stable for the year as a whole. This fully offset the brand's tariff burdens of around 900 million euros. These figures impressively demonstrate that with the implementation of our performance programs, we are not yet hitting our goal, but we are on the right track. With the brand group Progressive, Audi closed 2025 with a double-digit margin in the fourth quarter. With its fully electric models, Audi achieves a record number of deliveries. Good sales figures did not translate into operating profit here either due to US tariffs and the significant share of purely electric vehicles. Initial contributions from the performance program at Audi were able to offset these effects partially. As a result, the brand group Progressive achieves an operating profit of 3.4 billion euros, 14% below previous year's figure. This leads to a margin of 5.1%. The operating result of the sport luxury brand group reflects lower sales, particularly in the Chinese market and significant special items in 2025. Tariffs again had a negative impact here. Our technology platforms Carriot and PowerCo made visible progress in 2025, but still had a significant negative impact on the group's results. Carriot significantly increased its license income and reduced its operating loss by €0.3 billion to €2.2 billion. In the battery business, the operating loss increased as a result of the ramp-up of production capacity. Powerco started cell production at the Salzgitter Gigafactory on schedule at the end of 2025. The first battery cells made in Europe are to be used in series production in our vehicles starting this year, an important milestone in our electric strategy. Trade-on was significantly affected by a difficult market environment in the truck segment. Revenue declined to 42.5 billion, while operating profit fell to 2.4 billion euros, mainly due to lower sales volumes in North America and Brazil, negative exchange rate effects and costs for the new plant in China. Nevertheless, the latest trend in order intake gives us reason to be confident that there should be some improvement in 2026. The proportionate operating profit of our joint venture activities in China amounted to 958 million euros in 2025. Competitive pressure in China remains high, particularly in the premium and luxury segment. In the volume segment, prices have been stabilized in the course of 2025. Looking ahead, New locally developed electric vehicles with competitive technologies and cost structures are now entering the market. While 2026 will still be financially impacted by these launches, rising financial contributions are expected again in 2027. Our Group Board member for China, Ralf Brandstetter, will explain the progress made by his team in detail at an investor and analyst event during the Beijing Auto Show in China in April. Ladies and gentlemen, this brings me to the financial outlook for the 2026 financial year. We expect customer demand to remain largely stable all over the world. At the same time, we anticipate continued high competitive pressure. Against this backdrop, we expect the Volkswagen Group's revenue to grow by... between 0 and 3% in 2026. The operating margin is expected to be in the range of between 4 and 5.5%. And we expect net cash flow to be in the range of 3 to 6 billion euros and net liquidity in the range of between 32 and 34 billion euros. Ladies and gentlemen, The Volkswagen Group has everything it needs to successfully shape the transformation of the industry. We have strong brands, inspiring products and can rely on global economies of scale. These clear strengths are not currently fully reflected in our financial outlook. They are overshadowed by the current challenges of volatile global economy and tariffs, as well as increasing competition and high expenditure for transformation in the entire industry. In this environment, we want and we need to keep our combustion engine vehicles technologically competitive, continue to invest in exciting electric vehicles and the latest software solutions for our customers and expand our regional presence, especially in the United States. We can only achieve this if we continue to consistently reduce our costs, leverage group synergies, reduce complexity and thus sustainably increase our profitability. This is what we will be focusing on in the coming months. Thank you very much.

Well, thank you very much, Anu Antlitz and Oliver Blume, for your statements. And with that, we are going to take your questions. So can I ask you please to raise your hands if you have a question. I'll try to remember everyone. We start with Frank Johansson, GPA, and then Christina Hammond from Reuters.