VW Expects Higher Earnings, Sales In 2017

VW Expects Higher Earnings, Sales In 2017.

Mueller Excites Investors, Briefly Appearing To Signal FCA Interest.

Volkswagen forecast higher sales and earnings this year at its annual presentation of 2016’s financial performance, but analysts left unhappy at the amount of detail on offer.

VW had already reported its headline numbers for 2016, which represented a return to the black. For 2016, VW had net income of €5.1 billion after losing €1.6 billion the previous year. In 2015 VW took a €16.2 billion hit from dieselgate provisions, while for 2016, the damage amounted to €7.5 billion.

For 2017, VW forecast a 4 per cent increase in sales revenue, moderately higher vehicle sales, and a pre-tax return on sales of between 6 and 7 per cent. Last year it overtook Toyota to be the world’s biggest auto maker in terms of sales.

VW Group CEO Matthias Mueller caught investor’s attention briefly when he appeared to give credence to the idea that he might be interested in a merger with FCA. But after brief excitement on stock markets, Mueller’s remarks were thought to have only amounted to a “never say never” moment.

At the Geneva Car Show Mueller appeared to flatly reject an overture from FCA CEO Sergio Marchionne for talks on a possible merger.

Yes to conversation
“I am not ruling out a conversation,” he told reporters when asked about FCA, adding he hadn’t spoken to Marchionne for months. It would be helpful if Mr Marchionne were to communicate his considerations to me and not just to you,” Mueller said, according to the Wall Street Journal.

Investment researcher Evercore ISI said the meeting didn’t meet its expectations for more detailed information, and it didn’t see any future, at least in the short-term of any deal with FCA.

“VW’s management have much more pressing issues in our view, including improving profitability at VW brand, a solution for its components business, the on-going integration and potential spin-off of trucks, and, of course, closing the final doors on the dieselgate scandal. All of these challenges are likely to take several years to resolve. We don’t see VW entertaining any serious M&A until this has been concluded,” said Evercore ISI analyst Arndt Ellinghorst.