FINANCIAL POSITION AND CASH AND CASH EQUIVALENTS IN THE GROUP
The investment in the Suzuki Motor Corporation and the capital increase had a significant influence on the Volkswagen Group’s financial position in fiscal year 2010. The following sections give an overview of the Group’s liquidity development and outline the operating factors by division.
At €15.5 billion, the Volkswagen Group’s gross cash flow in the reporting period was €5.9 billion higher than in the previous year. After funds of €3.1 billion were released from working capital in fiscal year 2009, increased business activities led to funds tied up in working capital of €4.1 billion in the reporting period. As a result, cash flows from operating activities declined to €11.5 billion (€12.7 billion).
Cash flows from investing activities fell by 11.0% year-on-year to €9.3 billion in fiscal year 2010. Net cash flow was €2.2 billion, €0.1 billion lower than in 2009.
Cash and cash equivalents in the Volkswagen Group as reported in the cash flow statement amounted to €18.2 billion as of December 31, 2010, and were therefore at the prior-year level. Gross liquidity rose by €2.1 billion to €27.7 billion. Net liquidity in the Group improved to €–49.3 billion (€– 52.1 billion).
FINANCIAL POSITION IN THE AUTOMOTIVE DIVISION
The positive business development in the reporting period resulted in gross cash flow in the Automotive Division increasing by €5.8 billion year-on-year to €12.4 billion. Despite the volume effects from business expansion, strict working capital management led to the release of €1.6 billion (€6.2 billion). As a result, cash flows from operating activities rose by 8.7% to €13.9 billion.
At €5.7 billion, the Automotive Division’s investments in property, plant and equipment in fiscal year 2010 were on a level with the previous year. As sales revenue increased significantly, the ratio of investments in property, plant and equipment to sales revenue (capex) declined to 5.0% (6.2%). We invested mainly in the new production facilities in India and the USA and in models that we launched in 2010 or are planning to launch in 2011. These are primarily the successor models to the Passat, the Sharan, the Jetta, the Touareg and the Audi A6 as well as the new Audi Q3. Other key areas were the ecological focus of the model range and the expansion of modular toolkits.
Including the acquisition of the shares of Suzuki (€1.8 billion) the division recorded a total cash outflow of €9.1 billion, which was €1.2 billion lower than the previous year that included the indirect investment in Dr. Ing. h.c. F. Porsche AG via Porsche Zwischenholding GmbH and the sale of the Brazilian commercial vehicles business to the MAN Group. Net cash flow in the Automotive Division increased by €2.3 billion to €4.8 billion; €1.3 billion of this amount related to the Scania Vehicles and Services segment.
Following a cash inflow of €5.5 billion from financing activities in 2009, the division recorded a cash outflow of €3.2 billion in the reporting period. This was mainly attributable to the higher repayments of financial liabilities. The Volkswagen Group received cash funds of approximately €4.1 billion in fiscal year 2010 from the capital increase from authorized capital. Cash and cash equivalents amounted to €17.0 billion on December 31, 2010. At €18.6 billion, the Automotive Division’s net liquidity at the end of the reporting period was €8.0 billion higher than at the end of the previous year.
FINANCIAL POSITION IN THE FINANCIAL SERVICES DIVISION
In fiscal 2010, the Financial Services Division’s gross cash flow was 4.8% higher year-on-year at €3.2 billion. Increased business activities and the resulting higher financial services receivables meant that funds tied up in working capital rose by €5.7 billion (€3.1 billion). At €0.2 billion, cash flows from investing activities were at the prior-year level. Increased financial liabilities due to volume-related factors led to a cash inflow from financing activities of €2.3 billion (€39 million). Cash and cash equivalents amounted to €1.2 billion on December 31, 2010. After accounting for securities and loans, the gross liquidity of the Financial Services Division was €3.2 billion, down €0.3 billion on the previous year. Third-party borrowings increased to €71.2 billion (€66.2 billion). This was primarily due to the expansion of business activities and exchange rate effects. At the end of the reporting period, the Financial Services Division’s negative net liquidity, which is common in the industry, was €–68.0 billion (€–62.7 billion).