Volkswagen warns of risk from Ukraine crisis when operating profit doubles

Frankfurt — Europe’s top automaker Volkswagen AG doubled its operating profit in 2021, but Russia’s invasion of Ukraine and its impact on the supply chain will have an unexpected impact on its business this year. I warned that there is a possibility.

As Russia’s invasion shuts down assembly lines and destroys complex supply chains, automakers are offering alternative sources of key parts manufactured in Ukraine, including wire harnesses, far from China and Mexico. looking for.

Volkswagen’s chief financial officer, Arno Antritz, told journalists on Friday after announcing the preliminary results for 2021, “The conflict … will affect the global economy, raw materials, supply chain and thus our company.” Told.

“This impact cannot be definitively assessed at this time,” he added, adding that the group is currently working on using other suppliers in Eastern Europe and North Africa to obtain wire harnesses. rice field.

Volkswagen said the latest developments in the war in Ukraine risk having a negative impact on its business.

After doubling last year’s operating profit to € 19.3 billion ($ 21.1 billion), the company proposed raising its annual dividend for 2021 to € 7.50 per common stock and € 7.56 per preferred stock.

Volkswagen said that the doubling of operating profit in 2021 was due to higher prices and improved product mix, with an operating margin of 7.0% to 8.5% in 2022 compared to 7.7% in 2021. He added that he expected it to be.

Sales in 2021 were up 12.3% to € 250 billion, while sales in 2022 are expected to increase by 8% to 13%.

“But this guidance is subject to further developments in the war in Ukraine, especially the impact on the Group’s supply chain and the global economy as a whole,” the company said.

($ 1 = 0.9162 euros)

Christoph Steitz and Tom Sims