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Annual Report

Value contribution and return on investment in the current fiscal year

To date, the Chinese joint ventures Shanghai-Volkswagen Automotive Ltd. and FAW-Volkswagen Automotive Company Ltd., including the respective sales companies, have been included pro rata in the calculation of the value contribution and return on investment for the Automotive Division. Due to the growing importance of the component plants in China that are also accounted for using the equity method, we have additionally included the following companies with their proportionate figures in the calculation of the return on investment for the Automotive Division in the reporting period; the prior-year figures were adjusted:

  • VOLKSWAGEN FAW Engine (Dalian) Co., Ltd.
  • Volkswagen FAW Platform Company Ltd.
  • VOLKSWAGEN Transmission (Shanghai) Company Ltd.
  • Shanghai Volkswagen Powertrain Company Ltd.

The operating profit after tax of the Automotive Division was €5,859 million (€1,673 million) in fiscal year 2010. The key reasons for the significant year-on-year improvement are volume increases, country and model mix improvements, product cost optimization measures and positive exchange rate effects.

Invested capital declined slightly. As the cost of capital has also fallen, the cost of invested capital was €264 million lower year-on-year at €2,742 million. The increase in operating profit after tax resulted in a clear positive value contribution of €3,117 million (negative value contribution of €1,332 million).

The return on investment is the return on invested capital for a particular period based on the operating profit after tax. For the reasons already mentioned, this improved significantly year-on-year to 13.5% (3.8%).

More information on value-based management is contained in our publication “Financial Control System of the Volkswagen Group”, which can be downloaded from our Investor Relations website.

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VALUE CONTRIBUTION BY THE AUTOMOTIVE DIVISION1

 

 

€ million

 

2010

 

20092

1

Including proportionate inclusion of the Chinese joint ventures (including the respective sales and component companies) and allocation of consolidation adjustments between the Automotive and Financial Services divisions.

2

Adjusted. The return on investment after tax (RoI) is unchanged as against the previous year

Operating profit (starting point)

 

6,189

 

1,264

Plus effects of Scania purchase price allocation on earnings

 

273

 

295

Plus share of operating profit of Chinese joint ventures

 

1,907

 

831

Tax expense

 

–2,511

 

–717

Operating profit after tax

 

5,859

 

1,673

Invested capital (average)

 

43,525

 

43,561

Return on investment (ROI) in %

 

13.5

 

3.8

Cost of capital in %

 

6.3

 

6.9

Cost of invested capital

 

2,742

 

3,006

Value contribution

 

3,117

 

–1,332

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