Volkswagen Earning Rise in 2022 Despite High Inventory decreased Cash Flow

Volkswagen Earning Rise 2022: Volkswagen announced on Tuesday that its 2022 earnings margin exceeded expectations, reaching 8.1%. Despite facing disruptions in the supply chain, the company reported higher sales and earnings compared to the previous year.

Report portraying Volkswagen Earning Rise

Volkswagen AG announced that its earnings margin for 2022 was 8.1%, which was higher than expected and at the top of its forecast. Despite the challenges posed by supply-chain issues, the company reported increased sales and earnings compared to 2021 levels, although its net cash flow fell short of the target.

Volkswagen reported earnings of 22.5 billion euros, which placed the company towards the higher end of its forecasted 7-8.5% margin from March 2022. The company’s sales also surpassed 2021 figures, reaching 279 billion euros compared to 250.2 billion euros the previous year.

Despite the strong earnings, Volkswagen’s net cash flow was only 5 billion euros, falling short of its goal of matching 2021’s 8.6 billion euros. The company attributed this shortfall to supply chain instability, which resulted in high inventories of unfinished goods, supplies, and materials.

Plans FY’23

According to its statement, Volkswagen’s current plans for 2023 indicate that the increase in working capital at the end of 2022 will largely be reversed during the year.

In January, the Volkswagen Group reported that its deliveries increased by 12% in the latter half of 2022. However, the full-year deliveries were the lowest in over a decade due to the impact of COVID-19 lockdowns in China and the ongoing conflict in Ukraine on its supply chains.

What Volkswagen CFO revealed?

In October, Volkswagen’s Chief Financial Officer, Arno Antlitz, revealed that the company had 150,000 unfinished vehicles in its inventory and was increasing its stockpiles of supplies to guard against potential future shortages. This resulted in higher prices and cost-saving measures to offset the decline in unit sales.

Recently, Ford Motor Co reported a decrease in its quarterly profit, which it attributed to ongoing supply chain challenges, including a shortage of chips, leading to lower-than-expected volumes. The company also forecast a lower pre-tax profit for 2023.

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