Return on investment (ROI) and value contribution in the reporting period

The operating profit after tax of the Automotive Division, including the proportionate operating profit of the Chinese joint ventures, was €10,536 million (€10,904 million) in fiscal year 2013. The year-on-year decline was mainly caused by deteriorations in exchange rates, higher depreciation charges as a result of increased capital expenditures, higher research and development costs, and contingency reserves in the Passenger Cars and Power Engineering areas. The initial full-year consolidation of Porsche, optimized product costs as well as a considerably improved proportionate operating profit of the Chinese joint ventures had a positive effect compared with the prior year. Effects on earnings and assets from purchase price allocation are not taken into account as this is beyond what is feasible from an operational management perspective.

Invested capital rose to €72,749 million (€65,749 million), mainly due to the full effect of the consolidation of Porsche, as well as higher investments in property, plant and equipment.

The return on investment (RoI) is the return on invested capital for a particular period based on the operating profit after tax. It decreased in 2013 as against the previous year, but at 14.5% (16.6%) was still well above our minimum required rate of return of 9%.

The opportunity cost of capital – invested capital multiplied by the cost of capital, which increased as against 2012 – was up on the prior-year level at €6,038 million (€5,128 million). In conjunction with the lower operating profit after tax, this led to a declining but clearly positive value contribution of €4,497 million (€5,775 million).

More information on value-based management is contained in our publication entitled “Financial Control System of the Volkswagen Group”, which can be downloaded from our Investor Relations website: www.volkswagenag.com/ir

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RETURN ON INVESTMENT (ROI) AND VALUE CONTRIBUTION IN THE AUTOMOTIVE DIVISION1

€ million

 

2013

 

20122

 

 

 

 

 

1

Including proportionate inclusion of the Chinese joint ventures (including the relevant sales and component companies) and allocation of consolidation adjustments between the Automotive and Financial Services Divisions.

2

Prior-year figures adjusted to reflect application of IAS 19R.

Operating profit after tax

 

10,536

 

10,904

Invested capital (average)

 

72,749

 

65,749

Return on investment (ROI) in %

 

14.5

 

16.6

Cost of capital in %

 

8.3

 

7.8

Cost of invested capital

 

6,038

 

5,128

Value contribution

 

4,497

 

5,775