Financial Positions

Financial position and cash and cash equivalents in the Group

The Volkswagen Group’s gross cash flow was €24.4 billion in fiscal year 2013, up 21.5% on the prior-year figure. Funds tied up in working capital amounted to €11.8 billion, €1.1 billion lower than in the previous year. Cash flows from operating activities consequently rose by €5.4 billion to €12.6 billion.

At €14.9 billion, the Volkswagen Group’s investing activities attributable to operating activities in fiscal year 2013 were down 11.3% on the previous year, which had been characterized by the contribution in full of Porsche and the acquisition of Ducati. Investments in property, plant and equipment rose year-on-year to €11.4 billion (€10.5 billion). Net cash flow improved by €7.3 billion to €–2.3 billion.

Cash inflows from financing activities amounted to €9.0 billion (€13.7 billion). This figure includes the mandatory convertible note issued in June and the hybrid notes placed in August, which increased net liquidity by €1.1 billion and €2.0 billion, respectively. In the previous year, the increase in the stake in MAN SE led to a cash outflow of approximately €2.1 billion, while the mandatory convertible note issued in November 2012 increased net liquidity by €2.0 billion.

Cash and cash equivalents in the Volkswagen Group as reported in the cash flow statement amounted to €22.0 billion as of the end of the fiscal year, up €4.2 billion on the prior-year figure. Gross liquidity rose by €7.0 billion to €39.2 billion. Net liquidity in the Group was €–82.3 billion, compared with €–85.5 billion as of December 31, 2012.

Financial position in the Automotive Division

The Automotive Division’s gross cash flow amounted to €18.7 billion (€15.8 billion) in fiscal year 2013. The year-on-year increase was due to earnings-related factors and lower tax payments, following tax payments for previous years made in 2012. Strict working capital management led to the release of €1.9 billion (€0.5 billion). As a result, cash flows from operating activities increased by €4.4 billion to €20.6 billion.

At €16.2 billion, the cash outflow from investing activities attributable to operating activities in the reporting period was €0.3 billion lower than in the previous year. Investments in property, plant and equipment amounted to €11.0 billion (€10.3 billion), producing a ratio of investments in property, plant and equipment (capex) to sales revenue of 6.3% (5.9%). We invested mainly in our production facilities and in models that we launched in 2013 or are planning to launch in 2014. These are primarily vehicles in the up!, Golf, Passat, Audi A3, Audi TT and ŠKODA Fabia series, as well as the Porsche Macan and the Porsche Panamera. Other investment focuses were the ecological focus of our model range, the growing use of electric drives and our modular toolkits. Capitalized development costs rose to €4.0 billion (€2.6 billion). Volkswagen Bank GmbH sold its 50% indirect interest in LeasePlan Corporation N.V. to Volkswagen AG for approximately €1.7 billion as part of internal restructuring measures designed to strengthen equity in the Financial Services Division. This reduced liquidity within investing activities attributable to the Automotive Division. In the previous year, cash flows from investing activities were impacted by the integration in full of Porsche and the acquisition of Ducati. The Automotive Division’s net cash flow rose significantly by €4.6 billion to €4.4 billion.

In June 2013, we successfully placed a mandatory convertible note with an aggregate principal amount of €1.2 billion – €1.1 billion of which was classified as a capital contribution and increased net liquidity – via Volkswagen International Finance N.V. Like the mandatory convertible note issued in November 2012, which it supplements, this has a coupon of 5.50% and matures on November 9, 2015, though the note terms and conditions provide for early conversion options.

In August 2013, the Volkswagen Group successfully placed dual-tranche hybrid notes with an aggregate principal amount of €2.0 billion via Volkswagen International Finance N.V. They consist of a €1.25 billion note that carries a coupon of 3.875% and has a first call date after five years, and a €0.75 billion note that carries a coupon of 5.125% and has a first call date after ten years. Both tranches are perpetual and increase equity by the full amount, net of transaction costs. €2.0 billion of the hybrid notes was classified as a capital contribution, which increased net liquidity.

The dividend paid out to the shareholders of Volkswagen AG rose by €0.2 billion to €1.6 billion.

Overall, the Automotive Division recorded a cash inflow from financing activities of €1.7 billion (€2.6 billion), reflecting the lower proceeds from the issuance of bonds and higher cash outflows from the repayment of bonds compared with the previous year.

At €16.9 billion, net liquidity as of December 31, 2013 in the Automotive Division exceeded the prior-year figure by €6.3 billion.

Gross cash flow in the Passenger Cars Business Area amounted to €16.4 billion in fiscal year 2013, 25.4% higher than in the previous year due to earnings-related factors and lower income tax payments. The change in working capital was on a level with the 2012 figure at €1.8 billion. Cash flows from operating activities rose by 21.8% to €18.2 billion. At €14.8 billion, the cash outflow from investing activities attributable to operating activities decreased slightly compared with the previous year (€15.0 billion), which was affected by the integration of Porsche and the acquisition of Ducati. Investments in property, plant and equipment and capitalized development costs rose to €10.0 billion (€9.2 billion) and €3.6 billion (€2.3 billion), respectively. Net cash flow improved by €3.4 billion to €3.4 billion.

Gross cash flow in the Commercial Vehicles/Power Engineering Business Area was €2.3 billion, €0.4 billion less than in the previous year. Funds of €0.1 billion were released from working capital in fiscal year 2013, after funds were tied up in working capital in the previous year. Cash flows from operating activities rose by 88.0% to €2.4 billion. The cash outflow from investing activities attributable to operating activities decreased to €1.4 billion (€1.5 billion). Net cash flow improved considerably by €1.2 billion to €1.0 billion.

Financial position in the Financial Services Division

The Financial Services Division’s gross cash flow was €5.7 billion in the year under review, up 32.6% on the previous year due to earnings-related factors. Funds tied up in working capital increased slightly year-on-year as a result of volume growth. In particular, the sale of the interest of LeasePlan to Volkswagen AG to strengthen the Financial Services Division’s equity led to cash inflows from investing activities attributable to operating activities of €1.3 billion (€–0.4 billion). A cash inflow of €7.2 billion (€11.2 billion) was recorded from the issuance of bonds, among other things, to finance the increased business volumes. The Financial Services Division’s negative net liquidity, which is common in the industry, amounted to €–99.2 billion (€–96.1 billion) at the end of the reporting period. This was mainly due to the expansion of business activities.