Volkswagen Earnings: Beat on 2024 Profitability; We Remain at Lower End of 2025 Guidance

No-moat Volkswagen’s 2024 results beat our expectations as well as management’s guidance on the top- and bottom line. In particular, automotive free cash flow of just over EUR 5 billion exceeded management’s guidance at the preclose call of around EUR 2 billion, lifted by a beat on operating profit of around EUR 1 billion. The remainder of the cash flow beat was driven by a strong working capital release, with items that were more one-off in nature. An increase in provisions for the planned restructuring in automotive was offset somewhat by the reversal of personnel-related provisions, following collective bargaining agreements to forgo wage increases as well as a EUR 1 billion increase in provisions related to a miscalculation of time asset fringe benefits. We will review our fair value estimate, currently at EUR 264, following the release.