Company Reports

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to switch to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

No-moat Volkswagen reported fourth-quarter earnings per share of EUR 9.31, well above the FactSet consensus estimate of EUR 7.63 and up EUR 6.52 from the EUR 2.79 reported in the same quarter last year. Consolidated revenue rose 14.5% to EUR 87.2 billion from EUR 76.2 billion a year ago, which beat the consensus by 5%, primarily on strong volume. Consolidated deliveries also increased over 14% to 2.5 million in the quarter versus 2.2 million a year before.

No-moat Volkswagen reported third-quarter earnings per share of EUR 7.76, beating the EUR 7.07 FactSet consensus by EUR 0.69 and up EUR 0.63 from the EUR 7.13 reported last year. Consolidated revenue rose 12% to EUR 78.8 billion from EUR 70.7 billion a year ago and 3% higher than consensus. Industrial revenue increased 9% on solid pricing, mix, and volume partially offset by output disruption (chips, logistics, flooding in Slovakia), negative currency effect, while consolidated deliveries increased 14% to 1.5 million versus 1.3 million last year when the chip crunch was worse.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to switch to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

No-moat Volkswagen reported second-quarter earnings per share of EUR 6.48, missing the EUR 7.66 FactSet consensus by EUR 1.18 and down EUR 0.98 from the EUR 7.46 reported last year. Even so, consolidated revenue jumped 15% to EUR 80.1 billion from EUR 69.5 billion a year ago, slightly above consensus by EUR 100 million. Industrial revenue increased 16% on strong pricing, mix, and volume partially offset by continued but lessening chip shortage disruption and negative currency effect, while consolidated deliveries increased 18% to 1.6 million versus 1.3 million last year when the chip crunch was much worse.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to switch to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

We are maintaining our EUR 338 fair value estimate for the ordinary and preferred shares of Volkswagen after management held an investor day to present its new strategic plan to accelerate the transition to e-mobility and digitalization. The company says its steering model is based on profitable value creation over volume growth, lower fixed costs, and disciplined investment. The group executive board will set the financial targets for the brands. However, for the first time, the individual brands will be responsible for developing a performance program, with brand management teams’ compensation including incentives to achieve financial targets. We like that the brands will have more autonomy to execute strategy and more accountability for results.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to transition to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to transition to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

No-moat Volkswagen reported first-quarter earnings per share of EUR 8.43, handily beating the EUR 6.84 FactSet consensus by EUR 1.59 but down EUR 4.68 from the EUR 13.11 reported last year. Commodity hedging valuation effects added EUR 3.2 billion to operating profit in the prior year but reduced current quarter operating profit by EUR 1.3 billion. Even so, consolidated revenue jumped 21% to EUR 76.2 billion from EUR 62.7 billion a year ago, beating the consensus by 5%. Industrial revenue increased 24% on strong pricing, mix, and volume partially offset by continued but lessening chip shortage disruption, while consolidated deliveries increased 23% to 1.5 million versus 1.2 million last year when the chip crunch was much worse.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to transition to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

No-moat Volkswagen reported fourth-quarter earnings per share before special items of EUR 2.79, well below the EUR 8.38 FactSet consensus by EUR 5.59 and down EUR 6.65 from the EUR 9.44 reported last year. We surmise the shortfall was attributable to continuing operating disruptions from the chip shortage and logistics, higher raw material costs, increased energy costs, other inflationary cost pressures, and lower financial services profitability on increased interest rates and higher loss provisions. Even so, consolidated revenue jumped 20% to EUR 76.2 billion from EUR 63.6 billion a year ago, beating the consensus by 2%, on strong pricing and mix. Consolidated deliveries increased 19% to 1.5 million versus 1.2 million last year when the chip crunch was at its worst.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to transition to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

No-moat-rated Volkswagen AG reported preliminary full-year 2022 results that were nearly in line with our estimates. Group revenue, which includes financial services, was EUR 279 million, just shy of our EUR 280 million estimate. Adjusted EBIT for the group was EUR 22.5 billion with a margin of 8.1% versus our estimate of EUR 23.2 billion and an 8.3% margin. While we do not yet have full details, we suspect the results were supported by strong pricing and mix with improved volume compared with 2021, partially offset by supply chain disruptions from the chip shortage, the Ukraine war, inflationary cost pressures, and China's COVID-19 resurgence. The firm will report full financials and host a call with the investment community on March 14. For now, our fair value estimate is unchanged. The 5-star ordinary shares currently trade at a 49% discount, while the 5-star preferred shares trade at a 60% discount to our EUR 328 fair value estimate for both share classes.

No-moat Volkswagen reported third-quarter earnings per share before special items of EUR 7.13, beating the EUR 6.40 FactSet consensus by EUR 0.73 and up EUR 1.62 from the EUR 5.51 reported last year. Consolidated revenue jumped 24% to EUR 70.7 billion from EUR 56.9 billion a year ago, beating the consensus by 1%, on strong pricing and mix. Consolidated deliveries increased 13% to 1.3 million versus 1.2 million last year when the chip crunch was at its worst.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to transition to battery electric vehicles from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.

No-moat Volkswagen said the share price for the Porsche AG preferred IPO would be EUR 82.50, the high end of the previously announced range. This values the equity stake of Porsche AG being sold in an initial public offering and to Porsche Automobil Holding SE, the investment firm of founding families Porsche and Piech, at EUR 19.5 billion, just above the high end of our estimated EUR 14 billion-EUR 19 billion range (see our Volkswagen Sept. 6 note). Volkswagen split the capital of Porsche into 50% ordinary shares and 50% preferred shares. The equity stake sale includes Porsche Automobil Holding purchasing 25% of the ordinary shares at a 7.5% premium to the preferred IPO price. The company plans to begin trading preferred shares on Sept. 29. Volkswagen says that it will hold a December shareholder meeting to vote on a special dividend of 49% of the gross proceeds.

No-moat Volkswagen said the price range for the Porsche AG preferred IPO would be EUR 76.50-EUR 82.50. At the midpoint, this values the equity stake of Porsche AG being sold in an initial public offering and to Porsche Automobil Holding SE, the investment firm of founding families Porsche and Piech, at EUR 18.8 billion, just below the high end of our estimated EUR 14 billion-EUR 19 billion range (see our Volkswagen Sept. 6 note). Volkswagen split the capital of Porsche into 50% ordinary shares and 50% preferred shares. The equity stake sale includes Porsche Automobil Holding purchasing 25% of the ordinary shares at a 7.5% premium to the preferred IPO price. The company plans to begin trading preferred shares on Sept. 29. Based on the figures in Volkswagen’s pricing announcement, we estimate the total number of Porsche equity shares at 911 million, a nod to the model most associated with the Porsche brand, the 911. Volkswagen says that it will hold a December shareholder meeting to vote on a special dividend of 49% of the gross proceeds.

No-moat-rated Volkswagen AG says it intends to sell 25% of its ownership in Porsche AG. As a result, the firm split the capital of Porsche AG into 50% ordinary and 50% preferred shares. Porsche Automobil Holding SE, the investment firm of founding families Porsche and Piech, is expected to purchase 25% of the ordinary. Porsche AG will also have an initial public offering of 25% of the preferred shares. Volkswagen says that it will hold a December shareholder meeting to vote on a special dividend of 49% of the gross proceeds. Assuming an enterprise value-to-EBITDA multiple between 8 times and 10 times, we estimate Porsche’s valuation between EUR 80 billion to EUR 100 billion. We estimate the total equity value of the Porsche AG stake being sold to be between EUR 14 billion and EUR 19 billion.

In our view, Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to transition to battery electric vehicles, or BEV, from internal combustion powertrains. A broad array of brands, serving multiple segments, reduces reliance on any one vehicle category. As one of the world's leading volume producers, Volkswagen's economies of scale from common platforms across a number of models enable cost savings unattainable by smaller competitors.