Volkswagen Posts Deep Loss After Taking $18.28 Billion Hit on Emissions Scandal – Wall Street Journal

Posted: Friday, April 22, 2016

A traffic light shows red next to the Volkswagen factory in Wolfsburg, Germany.

FRANKFURT— Volkswagen AG


took a €16.2 billion ($18.28 billion) charge related to the emissions-cheating scandal, forcing it to slash its 2015 dividends and post a deep loss.

Volkswagen on Friday posted a net loss of €1.58 billion for 2015, compared with a net profit of €10.85 billion a year earlier. The company posted an operating loss of €4.1 billion for the year. Revenue rose 5.4% to €213.3 billion from €202.5 billion.

Volkswagen will cut its ordinary dividend to €0.11 a share after paying €4.80 for 2014, and its dividend on preferred shares to €0.17 from €4.86.

For the current year, Volkswagen said group revenue would fall as much as 5% partly because of the emissions issue, though overall deliveries should be around the level of 2015. It expects a “sharp decline” in passenger car revenue, the company said.

Shares in the car maker recovered some ground after dropping sharply on news of the loss. The company’s shares were down 0.5% at €126.45 in afternoon trading in Germany, after falling by about 6% after the news.

The €16.2 billion in charges compares with a previous figure of €6.7 billion that Volkswagen had set aside to cover recalls and repairs of vehicles affected by the emissions scandal. That figure was widely expected to balloon as the scandal spread, and a person familiar with the matter said this week the figure would enter double digits.

Volkswagen said the €16.2 billion charge covers buybacks, repairs, and legal costs to date.

Market Talk

Volkswagen Financials Worse than Expected, Says DZ Volkswagen’s operating performance last year and the provisions it has taken are worse than consensus estimates, says DZ Bank. The net profit result is burdened by a much lower tax benefit than expected by DZ, and the “massive dividend cut” exceeds market expectations. For 2016, Volkswagen predicts revenue to decrease to €203 billion, which is below consensus of €212.5 billion, according to DZ. Maintains a sell rating and fair value of €83. (, @FGeiger—WSJ)

Market Talk is a stream of real-time news and market analysis that’s available on Dow Jones Newswires

“Overall, investors should be relieved by the fact that Volkswagen has put a number on the financial risk associated with the vast majority of diesel issues,” analysts at Evercore ISI said.

The emissions crisis erupted last September when the U.S. Environmental Protection Agency accused Volkswagen of installing software to circumvent emissions tests in more than 500,000 diesel-powered cars in the U.S. Volkswagen later admitted the software was installed on nearly 11 million vehicles world-wide.

In the wake of the scandal, Volkswagen launched an internal investigation and hired legal firm Jones Day to help get to the bottom of who was responsible for the engine-rigging. On Friday, Volkswagen said the Jones Day investigation was at an advanced stage and would continue, but the company declined to release findings at this point.

Volkswagen’s 2015 results had originally been scheduled for March 10 but was postponed to give the company time to assess the fallout of the scandal. The company will release more information at its annual news conference on April 28.

News of the charge comes a day after the car maker took a major step toward resolving the scandal, agreeing to offer U.S. owners of nearly 500,000 vehicles a blend of car buybacks, repairs and compensation.

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