Q4 2024 Volkswagen AG Earnings Call & Investor Conference
Yes.
[music].
Unnamed: Ten weeks ago, 3 students were infected by COVID-19 and 7 others died, including a The conference is now being recorded.
The conference is now being recorded.
Unnamed: Hello, ladies and gentlemen, and welcome to the investor and analyst conference call of Volkswagen AG. At this time, all participants have been placed on a listen-only mode.
Speaker Change: Hello, Ladies and gentlemen, and welcome to the Investor and Analyst Conference call at all parks back in AG. At this time, all participants have been placed on a listen only mode.
Unnamed: The floor will be open for questions following the presentation.
Speaker Change: The floor will be opened for questions. Following the presentation.
Rolf Woller: Let me now turn the floor over to Rolf Woller. Thank you very much. Good morning, good afternoon or good evening, everyone from wherever you where you have dialed in.
Speaker Change: Let me now turn the floor back to heart failure.
Speaker Change: Thank you very much good morning, good afternoon, or good evening, everyone from ever you, whether you have dialed in.
Rolf Woller: And a warm welcome to the Volkswagen Group Investor Relations and Analyst Call 2024.
Speaker Change: And a warm welcome to the Fox Fun Group Investor Relations and I'll just call. It 20 to 24.
Rolf Woller: With me today, we have Oliver Blumer, our CEO, and Arno Antlitz, our CFO, COO.
Oliver Blume: With me today, we have Oliver Blume al if you and I know I'm fits.
Speaker Change: All our CFO of fuel.
Rolf Woller: The presentation is structured in three parts. First, Olli will provide a brief overview and highlight the key strategic milestones achieved in 2024. He will be followed by Arno, who will guide us through the financials of 2024 and provides us with the financial outlook for 2025.
Oliver Blume: The presentation is structured in three parts.
Oliver Blume: First of all it will provide a brief overview and highlight the key strategic milestones achieved in 2024.
Oliver Blume: He will be followed by Arnaud, who will guide us through the financials of 'twenty 'twenty four and provides us with your financial outlook for 2025.
Rolf Woller: Finally, Olli will provide us with a strategic outlook for 2025 before we enter the Q&A session.
Oliver Blume: Finally Ali will provide us with some strategic outlook for 2025 before we enter the Q&A session.
Rolf Woller: Before we start, let me provide a few remarks. You should have received the press release, the annual report, and other related materials, all of which were published early this morning. If you haven't received them, you can find all related documents on our website. In case of any issues, give us a call or drop us an email and we will send them straight to you.
Oliver Blume: Before we start let me provide a few remarks.
Oliver Blume: You should have received the press release, the annual report and other related materials all of which were published early this morning.
Oliver Blume: If you Havent received them you can find all religious documents on our website.
Oliver Blume: In case of any issues give us a call or drop us an email and we will send them straight to you.
Rolf Woller: As a reminder, and as always, the safe-haver language and other cautionary statements on page 2 of our presentation, which will govern today's presentation. I would like to encourage you to read the disclaimer carefully and in full since all forward-looking statements are qualified by this language. In order to maximize the time we have for the presentation and the Q&A, I will not read it loud to you.
Speaker Change: As a reminder, and as always to Safe Harbor language and other cautionary statements on page two of our presentation, which will govern today's presentation.
Speaker Change: I would like to encourage you to read the disclaimer carefully and then full since all forward looking statements are qualified by this language.
Speaker Change: In order to maximize the time, we have for the presentation into Q&A I will not read it aloud to you.
And.
Oliver Blumer: With that and any further ado, I hand over to Olli, Olli, the floor is yours. Thank you, thank you Rolf. And also from my side, a warm welcome to everyone on the call after our annual media conference we have held in Wolfsburg, our headquarter. 2024 was the year of a major strategic decisions for Volkswagen Group and all this in a rapidly changing environment. We have faced weak demands in Europe, rising trade barriers, challenging industrial framework conditions in our domestic market, fierce price competition especially in China, and at the same time the need to invest powerfully in the future.
Ali: With that and any further Ado I hand over to Ali Ali the floor is yours.
Ali: Thank you well. Thank you Ross and also from my side, a warm welcome to everyone on the call. After our annual media conference, we upholds in voice poke a headquarter.
Ali: Two.
Ali: 'twenty 'twenty four of them was the year of a major strategic decisions for folks bond group and all of this in a rapidly changing environment, we have face weak demand in Europe rising trade barriers challenging industrial framework conditions in our domestic market P S price comp.
Petition, especially in China and at the same time, the need to invest portfolio in the future.
Oliver Blumer: Volkswagen Group has not allowed those to slow it down, on the contrary, we have set a decisive course for 2024 and we drove change forward sustainably along our group-wide top ten programme and even gone further. In 2024, we have achieved the goals we set ourselves.
Ali: Volkswagen Group has not allowed those to slow it down on the contrary we have sets a decisive course for 'twenty 'twenty Forum and we drove change format sustainably along our group wide top 10 program and even gone further.
Ali: In 'twenty 'twenty four we have achieved the goals, we set ourselves let us have a look on some of our key achievements in the last year.
Oliver Blumer: Let us have a look on some of our key achievements in the last year. 2024 marked a year with a comprehensive model offensive. We have been renewing our main volume models from Volkswagen, Skoda, Cupra, and many highlights from Audi and Porsche. In total, we launched more than 30 new models to the markets across our group. We have sharpened the designs, once again emphasized our brand identities, and measurably improved the quality of our products and services. Well-received in the market. And we are rewarded with the great feedback beside of our customers also from the trade press.
Ali: [laughter] Freddie Fannie four marked a year with a comprehensive model offensive, we have been renewing our main volume models from folks who are in school that coupon and many highlights from Audi and Porsche.
Ali: In total we launched more than 30, new models to the market across our group we have sharpened the designs once again emphasize our brand identities and measure I believe improved the quality of our products and services that are received in the market.
Ali: And we are rewarded with the great feedback.
Ali: Beside of our customers is also from the trade press.
Oliver Blumer: This proves we are right on track. In China, our new strategy makes us fit for the opportunities and the challenges in the world's luggage car market and much more competitive. with new strong regional tech partners along the key differentiating technologies, the launch of our innovation hub in Hefei, accelerating development time to China speed, reworked cost structures allowing us to match local competition, and new product strategy fully tailored to our Chinese customers. Unlike many other manufacturers, we continue to earn money in China thanks to our strong position in the combustion engine business. an important factor in the most competitive and agile market.
Ali: This proofs we are right on track.
Ali: In China, our new strategy makes us fit for the opportunities and the challenges and the world's largest car market and much more competitive.
Ali: This new strong regional take partners along the key differentiating technologies the allowance of all innovation hub in Hefei accelerating development time two of China's speed.
Ali: He worked at cost structure, allowing us to match local competition.
Ali: And new products strategy fully tailored to our Chinese customers. Unlike many other manufacturers we continue to earn money in China. Thanks to our strong position as a combustion engine business and.
Ali: An important factor them in the most competitive and agile market.
Oliver Blumer: This allows us to continue to invest in new models and technologies and enhance our competitiveness.
Ali: This allows us to continue to invest in new models and technologies and to enhance our competitiveness.
Oliver Blumer: North America remains key to the Volkswagen Group's growth strategy. With our investments in the region and in strategic partnerships, we are sending a clear signal for our ambition to grow in new market segments in this region. The revival of Heritage brand Scouts allows us to enter the attractive pick-up and rugged SUV business with highly flexible drivetrain options. Meanwhile, we have received almost 80,000 orders with prepayment.
Ali: North America remains key to the folks Varden group's growth strategy it.
Ali: Our investments in the region and in strategic partnerships, we are sending a clear signal for our ambition to grow in new market segments in this region.
Ali: The revival of heavy to heritage brands Scouts allows us to enter the attractive pick up and rugged SUV business with highly flexible drivetrain options. Meanwhile, we have received almost 80000 orders with prepayments.
Oliver Blumer: In 2024, we reached major milestones for a global software strategy. We have realigned our software activities and strengthened the team with new partners. Together with Chopin for China and our new US partner Rivium for the other regions of the world, we are developing the electronic architectures and software solutions of the automotive future. Carriott will focus on the further developed and central digital services, autonomous driving, infotainment, cloud services, and data processing and backend solutions. In collaboration with Carriott, we are also putting the responsibility and control over the software where it belongs with our brand.
Ali: In 'twenty to 'twenty four we reached major milestones for a global software strategy, we have realigned our soft activities and strengthened the team with new partners together with chop painful China and on U S partner Arabian for the other regions of the World. We are developing the electronic architecture and soft.
The solutions of the automotive future carrier they pay it goes on the further develop and central digital services autonomous driving infotainment cloud services.
Ali: And our data processing and banking solutions and.
Ali: In collaboration with carriers, we are also putting the responsibility and control over this whole fair, where it belongs with our brands.
Oliver Blumer: Last but not definitely not least, the future Volkswagen agreement is a foundation for an economically success future of our German operations and Volkswagen AG in particular. A milestone in rebuilding competitive and future-proof structures in the long term. Reducing overcapacities in Germany, lowering labor costs, enhancing productivity, and achieving competitive plant costs. These are the cornerstones of the agreement. adherence to the agreed productivity targets. is reviewed quarterly. This is how we ensure that the agreements made are met. Negotiations were tough, but we achieved a fair result and effective for our medium-term strategic target.
Speaker Change: Last but not definitely not least the future folks along agreement as a foundation for an economic Kellys success future of our German operations and folks are on a G. In particular.
Speaker Change: Mike Stone and rebuilding competitive and future proof structures in the long term.
Speaker Change: Reducing overcapacities in Germany, and lowering labor costs, enhancing productivity and achieving competitive plant cost. These are the cornerstones of the agreement.
Speaker Change: Adherence to the agreed productivity targets.
Speaker Change: Is reviewed quarterly.
This is how we ensure that the agreements made are met.
Speaker Change: Negotiations are tough, but we achieved a fair result, and effective for our medium term strategic targets.
Oliver Blumer: Arno will provide more details later in the presentation. Despite considerable challenges and restructuring work, we were able to achieve almost 325 billion euros. in group revenue and $19.5 billion in operating profits. These are solid results in a challenging global environment. The fact that we have achieved them in a phase of restructuring with considerable cost headwinds proves our resilience and our will to shape the future. With our robust balance sheet and net liquidity, we are well prepared for the new year. This financial stability gives us a necessary leeway to continue investing in the future and pursue our strategic goals.
Speaker Change: We'll provide more details later in the presentation.
Speaker Change: Despite considerable challenges and restructuring work, we were able to achieve almost 325 billion euros.
Speaker Change: And group revenue and $19 5 billion in operating profits. These are solid results in a challenging global environment.
Speaker Change: <unk> that we have achieved them in the face of restructuring with considerable cost headwinds proved our resilience and are willing to change the future is our robust balance sheets and net liquidity, we are well prepared for the new year.
Speaker Change: This financial stability gives us unnecessary.
Speaker Change: How are you leeway to continue investing in the future and pursue our strategic goals based on these results we propose a dividend of 6.36.
Oliver Blumer: Based on these results, we propose a dividend of 6.36 euro per preference share to the annual general meeting in May. This corresponds to a payout of 30% of net profit.
Speaker Change: Europe, our preference share to the annual general meeting in May and this corresponds to a payout of 30% of net profit.
Oliver Blumer: Our product renewal is starting to pay off with a relaunch of more than 30 models across all brands. We closed 2024 with a strong 2.5 million deliveries in the fourth quarter. Nine million vehicles delivered means that we kept our global market share. Incoming orders in Western Europe increased in the fourth quarter by around 128,000 units and stood at around 800,000 units. Incoming orders in December once again accelerated significantly compared to the previous year and increased by almost 90,000 vehicles. Incoming orders from 2024 as a whole were therefore a good 16% up to the previous year, mainly because of our attractive new product range, which is becoming increasingly available to the market.
Speaker Change: Oh product renewal is starting to pay off was that relaunch of more than 30 models across all brands. We closed 2024. It was a strong 2.5 million deliveries in the fourth quarter 9 million vehicles delivered mean sentry kept our global market share in.
Speaker Change: Incoming orders in Western Europe increased in the fourth quarter up by around 128000 units and stood at around 800000 units incoming orders in December once again accelerated significantly compared to the previous year and increased by almost 90000.
Speaker Change: <unk> codes incoming orders from 24.
Speaker Change: Oh, well therefore, it was 16% up to the previous year, mainly because of all the attractive new product range, which is becoming increasingly available to the market at the end of December the order backlog in Europe stood at a very healthy level of around 850000 units.
Oliver Blumer: At the end of December, the order backlog in Europe stood at a very healthy level of around 850,000 units. Deliveries in Europe were stable, and Volkswagen Group remains the market leader for both combustion engines and electric vehicles. The increase in deliveries of electric vehicles in particular had a positive impact in the final quarter, which were almost 20% higher than in the same quarter of the previous year. Our activities in North America recorded strong growth of 6%, with the Volkswagen brand even growing by 18% in the region.
Speaker Change: Deliveries in Europe were stable and our focus on group remains the market leader for both combustion engines and electric vehicles. The increase in deliveries of electric vehicles in particular had a positive impact in the final quarter, which fell almost 50% higher than the same quarter of the previous year our activities.
Speaker Change: America recorded strong growth of 6% was it pokes fun brand, even growing by 18% in the region.
Oliver Blumer: This is an important first step. towards a more robust global presence and an excellent result from our team there. All in, we almost compensated for the communicated and anticipated decline of sales in China in an intense competitive environment. Despite the weakness of the German electric vehicle market, we kept our share of battery electric vehicles stable in 2024. In total, we delivered 745,000 battery electric vehicles to customers worldwide in 2024, about 3 percent less than in 2023. In addition, Plug-in hybrid sales were up by 5% to 270,000 units, and we expect strong growth in 2025 to a battery electric vehicle share of 10% to 14% globally.
Speaker Change: So this is an important first step.
Speaker Change: Towards a more robust global presence and an excellent result from our team there.
All in we almost compensated for the communicated an analyst anticipate it decline of sales in China, and an intense competitive environment.
Speaker Change: Despite the weak men weakness of the German electric vehicle market and we kept our shelf battery electric vehicles stable in 2024 and told US that in total we delivered 745000 battery electric vehicles to customers worldwide in 24 about 3% less than.
Speaker Change: Twenty-three in addition.
Speaker Change: Plug in hybrid sales were up by 5% to 270000 units.
Speaker Change: We expect some gross and 25 to a battery electric vehicle chair of 10% to 14% globally key drivers will be the latest successful product launches, including the ITU seven tour the entry level of Golar, Iraq as well as the premium and luxury segment vehicles policy E Con and.
Oliver Blumer: Key drivers will be the latest successful product launches, including the ID.7 Tourer, the entry-level Skoda Aerog, as well as the premium and luxury segment vehicles, Porsche Imacan and Audi Q6 e-tron. Not to forget the all-new Audi A6 e-tron. Our upgraded model line is very well received in the markets, as evidenced by the latest order intake in Western Europe, which is up by almost 50% year-to-date. Battery electric vehicles represent more than 20% of our European order book. All over, we got off to a promising start towards the full year target and after the first two months, our battery electric vehicle share in Western Europe has been increasing to more than 18%, strongly up from 9% in quarter one in 24.
Speaker Change: Oh, the acoustics, each one not to forget the all new Audi a six each one our upgraded model line, it's very well received in the market as evidenced by the latest order intake in Western Europe, which is up by almost 50% year to date bedroom.
Speaker Change: Battery electric vehicles represent more than 20% of our European order book.
Speaker Change: All of them, we got off to a promising start towards our full year target and after the first two months all battery electric record share in Western Europe has been increasing to more than 18% strongly up from 9% in quarter, one and 24 it has doubled.
Oliver Blumer: It has doubled.
Arno Antlitz: I would now like to hand over to Arno for a detailed analysis of our financial performance. Yeah, thank you, Oliver. And a good morning to everyone from my side, too.
Onno: Now like to hand over to onno for a detailed analysis of our financial performance.
Speaker Change: Yeah. Thank you all you Bob and good morning to everyone from my side too.
Arno Antlitz: Ladies and gentlemen, in 2024 we took important strategic decisions. and achieved important strategic milestones. With the progress we have made, we have consistently driven forward the transformation of our company and laid the foundations for making the Volkswagen Group even more competitive and financially robust. I would like to thank all employees who have contributed to the success.
Speaker Change: Ladies and gentlemen, and 'twenty 'twenty four we took important strategic decisions.
Speaker Change: And achieved important strategic milestones.
Speaker Change: The progress we have made we have consistently driven forward the transformation of our company.
Speaker Change: And laid the foundation for making the Fox one group, even more competitive and financially robust.
Speaker Change: I would like to thank all employees, who have contributed to this success.
Arno Antlitz: The market environment in 2024 was truly challenging. Against that backdrop, we delivered a decent overall result. Vehicle sales in 2024 totaled 9 million units, 3% below the previous year's figure. Excluding our joint venture activities in China, sales were on par with the previous year at 6.3 million vehicles. Sales revenue rose by 1% to around €325 billion. Operating profit fell by 15% to €19.1 billion. The corresponding operating margin was 5.9%. operating result was burdened by costs for the ongoing renewal of our product range. in an increase of fixed cost and considerable restructuring expenses totaling about 3 billion euros.
Speaker Change: No I can environment in 'twenty 'twenty four will soon.
Speaker Change: The challenging against that backdrop.
Speaker Change: <unk> delivered a decent overall reside.
Speaker Change: Regular sorensen 'twenty 'twenty four totaled 9 million units, 3% below the previous year's figure.
Speaker Change: Excluding our joint venture activities in China sales were on par with the previous year at $6 3 million vehicles.
Speaker Change: Since I'm, new rose by 1% to around 325 billion Euro operating profit fell by 15% to 19.1 billion Euro.
Corresponding operating margin was five 9%.
Speaker Change: The operating result was burdened by costs for the ongoing renewal of our product range.
Speaker Change: And an increase of fixed cost and considerate restructuring expenses totaling about 3 billion euro.
Arno Antlitz: Non-operating items in total, including positives, had a negative impact of 2.6 billion Euro on earnings. And for these one-offs, we achieved an operating result of 21.7 billion Euro and a margin of 6.7%. Profit after tax was 31% lower and came in at 12.4 billion euro. This was due to a significant decline in the financial result, which was driven by a lower equity result of our Chinese-Chinese ventures. In addition, we wrote down the remaining net carrying amounts of the equity investment and the loan receivables from Norsvold after the opening of the creditor protection proceedings.
Speaker Change: Non operating items in total, including positives had a negative impact of 2.6 billion Euro on earnings.
Before these one offs, we achieved an operating result of $21 7 billion Euro.
Speaker Change: And the margin of six 7%.
Speaker Change: Profit after tax was 31% lower and came in at $12 4 billion Euro.
Speaker Change: This was due to a significant decline in the financial result, which was driven by lower equity research for our Chinese joint ventures.
Speaker Change: In addition, we wrote down the remaining net carrying amount of the equity investment and the loan receivables from no sports.
Speaker Change: After the opening of the grid to job protection proceedings.
Arno Antlitz: On this basis, we propose a dividend of €6.36 per preferred share and €6.30 per ordinary share to the Annual General Meeting. The dividend proposal is 30% lower year-on-year and corresponds to a payout ratio of around 30%. This is in line with our communicated dividend policy and a clear sign that our shareholders can rely on what we promise also in demanding times. At 5 billion euro, the net cash flow in the automotive division exceeded our updated forecast of around 2 billion euro in September and was in line with our original expectation of 4.5 to 6.5 billion euro.
Speaker Change: On this basis, we propose a dividend of six euro and 36 cents.
Speaker Change: Preferred share in six euro and 30 cents per ordinary share to the annual general meeting.
Speaker Change: The dividend proposal is 30% lower year on year and corresponds to a payout ratio of around 30%.
Speaker Change: This is in line with our communicated dividend policy and a clear sign that our shareholders can rely on what we promise also in demanding times.
Speaker Change: At 5 billion Euro the net cash flow in the automotive division exceeded our updated forecast of around 2 billion Euro in September and was in line with our original expectation of 4.5 to $6 5 billion Euro.
Arno Antlitz: This was to a large extent to another strong working capital management at the end of the year and a subsequently strong fourth quarter with a net cash flow of around 1.7 billion Euro. Excluding M&A effects and diesel-related payments, the clean net cash flow totaled €7.1 billion. This net cash flow includes payments totaling €2.3 billion in connection with the acquisition of the stake in and the establishment of the joint venture with Rivian. Net liquidity in the automotive division continues to stay on a solid level at the end of 2024. At 36.1 billion Euro, it remains solidly above our target of 10% of group sales revenue.
Speaker Change: As opposed to a large extent to another strong working capital management at the end of the year and subsequently strong fourth quarter.
Speaker Change: Net cash flow of around $1 7 billion Euro.
Excluding M&A effect and diesel related payments the clean net cash flow totaled 7.1 billion euro.
Speaker Change: Net cash flow includes payments totaling $2 3 billion euro in connection with the acquisition of the stake in <unk> and the establishment of the joint venture with Vivian.
Speaker Change: Net liquidity in the automotive division continues to stay on a solid level at the end of 'twenty 'twenty four.
Speaker Change: At $36 1 billion euros, it remains solidly above our target of 10% of group sales revenue.
Speaker Change: Yeah.
Arno Antlitz: Let's have a look at our reporting segments. Passenger cars achieved an operating result of €11.4 billion. The operating margin stood at 5.3%, 1.4 percentage points below the previous year's level. The heavy commercial vehicles continued its strong trend. They were able to further increase their operating results to 4.2 billion Euro. The return on sales stood at 9.1 percent. Financial Services Division achieved an operating result of 3.1 billion Euro, which corresponds to a decline of 18 percent compared to the previous year.
Speaker Change: Let's have a look at our reporting segments.
Speaker Change: That's in Chicago Chieftain, operating result of $11 4 billion in Europe. The operating margin stood at five 3%, one plus one four percentage points below the previous year's level.
Speaker Change: The heavy commercial vehicles continued its strong trend they were able to further increase their operating besides 242 billion euro but return on sales stood at nine 1%.
Speaker Change: Financial services Division of chieftain operating besides a frequent 1 billion euro which corresponds to a decline of 18% compared to the previous year.
Arno Antlitz: Looking at the bridge for our passenger car segment. Volume price and mixed effect had a slightly positive impact of 0.3 billion Euro. A positive 1.4 billion Euro is related to volume effect. The negative mix effect is due to the decline in vehicle sales at Porsche and Audi in the full year and the limited availability of V6-V8 engines at Audi in Q1 and H1. Price effects were slightly negative in 2024 with half a billion Euro. We achieved sustained positive effects from list price increases, but these effects could not fully compensate for higher discounts, particularly for electric vehicles in Europe and US.
Speaker Change: Looking at the bridge for our passenger car segment.
Speaker Change: Volume price and mix effect had a slightly positive impact of <unk> 3 billion Euro.
Speaker Change: Positive 1.1 billion Euro is related to volume effects. The negative mix effect is due to the decline in vehicle sales at Porsche and Audi in the full year and the limited availability of 68 engines at all in coupon.
Speaker Change: And each one.
Speaker Change: Price effects were slightly negative in 'twenty 'twenty four with half a billion euro we achieved sustained positive effects from list price increases.
Speaker Change: But these effects could not fully compensate for higher discounts, particularly for electric vehicles in Europe and U S.
Arno Antlitz: Pricing trends stabilized throughout the year, helped by great new model launches by all brands in the second half. The non-recurrence of the negative valuation effects in 2023 primarily from the valuation of commodity contracts led to a significant positive effect. product costs had a slightly positive impact of 0.2 billion Euro on earnings. The main negative driver of the passenger car segment's earnings performance was a significant increase in fixed costs over 8 billion. The drivers were higher amortization of research and development of about 2 billion euro, around 2 billion euro resulting from higher depreciation from capex spent in previous years, certain increase in indirect personnel costs resulting from a tariff agreement in 2022.
Speaker Change: The pricing trends stabilize throughout the year helped by great New model launches by all brands in the second half.
Speaker Change: The non recurrence of the negative valuation effects in 'twenty two 'twenty three primarily from the valuation of commodity contracts led to a significant positive effect.
Speaker Change: Product costs had a slightly positive impact of point 2 billion Euro on earnings.
Speaker Change: Negative driver of the passenger car segments earnings performance.
Speaker Change: The significant increase in fixed costs over 8 billion.
Speaker Change: The drivers for higher amortization of research and development of about 2 billion Euro.
Speaker Change: Around 2 billion euro, resulting from higher depreciation from Capex spend in previous years.
Speaker Change: Third an increase in indirect personnel costs, resulting from the tariff agreement in 2022.
Arno Antlitz: And finally, the aforementioned expenses for restructuring measures had a negative impact on earnings of about 2 billion Euro in the automotive EBIT bridge. The trend towards an increase in overhead costs in the automotive division continued in 2024 with a further increase of 2.7 billion Euro. Higher personnel costs as a result of collective wage increases from 2022 contributed significantly to the increase over the last two years. In addition, the expansion of our activities in the battery business, the establishment of Scout in the US, and the ramp-up of the fully consolidated operating units in China led to an increase of 0.7 billion Euro.
Speaker Change: And finally, the aforementioned expensive for restructuring measures had a negative impact on earnings of about 2 billion Euro in the automotive EBIT bridge.
Speaker Change: Yeah.
Speaker Change: The trend towards an increase in overhead costs in the automotive division continued in 'twenty 'twenty four but if a further increase of $2 7 billion Euro.
Speaker Change: Hi, the personnel costs as a result of collective wage increases from 'twenty to 'twenty two contributed significantly to the increase over the last two years.
Speaker Change: In addition to the expansion of our activities in the bedroom business establishment of scout in the U S and the ramp up of the fully consolidated operating units in China led to an increase of <unk> 7 billion Euro.
Arno Antlitz: One thing is clear, in order to ensure the robustness of Volkswagen in a difficult market environment, we must counteract this development decisively. We have therefore launched extensive initiatives across all brand groups and brands to increase efficiency and productivity and to establish competitive cost structures, which I will discuss later.
Speaker Change: One thing is clear in order to ensure the robustness of folks hung in a difficult market environment, we must come under active development decisively.
Speaker Change: We have therefore launch extensive initiatives across all brand groups and brands to increase efficiency and productivity and to establish competitive cost structures, which I will discuss later.
Arno Antlitz: Within the passenger car segment, the Brand Group Core recorded a slight sales growth of 2% to €140 billion. The operating result came in at €7 billion, 4% below the previous year. The margin of Brancow caused to that 5%. Margin of brand Volkswagen came in at 2.9%, again underlying the urgent need for restructuring. Skoda achieved an impressive 8.3% showing what can be achieved based on Volkswagen Group platforms at a competitive cost base. Sales revenue for Brand Group Progressive was 8% below the previous year's level. Operating profit fell to 3.9 billion Euro, corresponding to a margin of 6.0%.
Speaker Change: Preventing the passenger car segment the brand group core recorded a slight sales growth of 2% to 140 billion Euro. The operating result came in at <unk> 7 billion euro 4% below the previous year.
Speaker Change: The margin.
Speaker Change: Could cause stood at 5%.
Speaker Change: Margin of Brent Volkswagen came in at 2.9% again underlying the urgent need for restructuring.
Speaker Change: Quarter achieved an impressive eight 3% showing what can be achieved based on folks run group platforms at a competitive cost base.
Speaker Change: Sales revenue for brand group Progressive was 8% below the previous year's level operating profit fell to $3 9 billion euro corresponding to a margin of six points zero percent.
Arno Antlitz: This was largely due to the announced phasing out of production at the plant in Brussels and residual value effects of minus 0.7 billion Euro. Adjusted for these two effects, the margin would have been at a solid level of over 9%. The brand group Sport Luxury closed the financial year with an operating margin of 14.5 percent, 4.1 percentage points below the previous year's figure.
Speaker Change: This was largely due to the announced facing out of production at the plant in Brussels, and residual value effect of minus <unk> 7 billion Euro.
Speaker Change: Adjusted for these two effects the margin would have been at a solid level of over 9%.
Speaker Change: The brand group sports luxury close the financial year with an operating margin of 41, 5% four one percentage points below the previous year's figure.
Arno Antlitz: We made significant progress in restructuring the Volkswagen brand with the Future Volkswagen Agreement, which consists of three components. A new wage agreement? structural measures to reduce overcapacity in Germany and the reduction of the workforce at the German side. An important component is the new collective wage agreement for the Volkswagen AG companies with the following core elements. The collective agreed wage increase of more than 5% over 2025 and 2026 will be suspended until 2030. With effect from 2027 onwards, a new remuneration system with an overall 6% reduction in the collectively agreed salary will come into force.
Speaker Change: We made significant progress in restructuring the flex wrong brand with future Fork swung agreement, which consists of three components.
Speaker Change: And you wait your agreement.
Speaker Change: Structural measures to reduce overcapacity in Germany.
Speaker Change: And the reduction of the workforce at the German sites.
Speaker Change: An important component its a new collective wage agreement for the flex one itchy companies if the following core elements. The collective agreed wage increase of more than 5% of what 20 to 25 and 226 will be suspended until 2030.
Speaker Change: With effect from 'twenty, seven onwards, and new randomization system with an overall, 6% reduction in the collective.
Speaker Change: Agreed salary will come into force.
Arno Antlitz: Overall, it means that the increase in personnel expenses set out in our planning will be curbed by a total of around 1.5 billion Euro. The agreement also provides for an adjustment of technical production capacity in Germany. Overall, technical capacity will be reduced by around 730,000 units by 2029. Initial effects are expected from the discontinuation of production in Dresden in 2026 and Osnabrück in mid-2027, as well as the relocation of the Golf to Puebla. with the reduction from four to two lines in Wolfsburg and one line in Zwickau, major steps will follow until 2028. Clear targets and milestones have been set for each plant to improve productivity and factory costs.
Speaker Change: Overall, it means that the increase in personnel expenses set out in our planning would be curbed by a total of around one 5 billion euro.
Speaker Change: The.
Speaker Change: And also provide some fun adjustment of technical production capacity in Germany over all technical capacity will be reduced by around 730000 units by 2029.
Speaker Change: Initial effects I expected from the discontinuation of production dressed in in 2026 and it was not break in midst 2027.
Speaker Change: Well as the relocation of the Gulf to buoy blow.
Speaker Change: If the reduction from four to two lines invoice book and 193 call major steps will follow until 'twenty 'twenty eight.
Speaker Change: Good targets and milestones have been set for each plant to improve productivity and factory cost.
Arno Antlitz: and these are reviewed on a quarterly basis. The bundle of measures is complemented by the necessary reduction of workforce at Volkswagen's German sites by 35,000 until 2030, of which around 30,000 will be at Volkswagen AG. Around two-thirds of these are expected to be achieved by utilizing a demographic curve achieved through retirement and early retirement schemes. The reduction of more than half of these jobs has already been contractually agreed.
Speaker Change: And these are reviewed on a quarterly basis.
Speaker Change: The bundle of measures and complemented by the necessity reduction of workforce at Fox filings German sites by 35000 foot by 35000 until 'twenty 30 of which around 30, thousands will be at folks buying a cheap.
Speaker Change: Around two thirds of these are expected to be achieved by utilizing a demographic curve G to retirement and early retirement schemes.
Speaker Change: The reduction of more than half of these jobs has already been contractually agreed the hiring freeze remains in place.
Arno Antlitz: The hiring freeze remains in place.
Speaker Change: Yeah.
Arno Antlitz: Ladies and gentlemen, the future Volkswagen agreement provides the decisive prerequisite for making Volkswagen AG and its businesses in Germany competitive and profitable on a sustainable basis. However, the agreement we reached just before Christmas marks not the end of this process. It's just the beginning of it. The real work starts now. Only by consistently implementing the agreed bundles of measures over the course of the next five years, Volkswagen AG will realize the necessary net cost effects of over 4 billion Euro in the medium term.
Speaker Change: Ladies and gentlemen, the beautiful expanded agreement provides a decisive prerequisite for making forks, one at G and its businesses in Germany competitive and profitable on a sustainable basis. However, the agreement we reached just before Christmas marks not the end of this process is just the beginning of it the real work.
Speaker Change: No.
Speaker Change: Only by consistently implementing their grit bundles of measures over the course of the next five years flex among itchy bid realize the necessary net cost effects of over 4 billion euro in the medium term.
Arno Antlitz: Carriot recorded a significant increase in license income due to its business model and the successful launch of the 1.2 software. Sales rose accordingly by 23% to around 1.3 billion euros. At 2.4 billion, the operating loss was nevertheless roughly on par with previous year. The reported net cash flow was minus 2.5 billion and as in the previous year carried benefited from an intra-group tax refund totaling 1.1 billion euros.
Speaker Change: Kerry it's recorded a significant increase in license income to its business model and the successful launch of the 1.2 software sales rose accordingly by 23% to around $1 3 billion Euro.
Speaker Change: At $2 4 billion the operating loss was nevertheless, roughly on par with previous year.
Speaker Change: The reported net cash flow was minus $2 5 billion and as in the previous year carriage benefitted from an intra group tax refund totaling 1.1 billion euro.
Arno Antlitz: The earnings performance of our battery business was characterized by the ongoing ramp-up of production capacities, particularly in Salzgitter and Valencia. This, together with some restructuring burden, led to a significant increase in the operating loss to minus 1.1 billion Euro. In conjunction with the increased investment volume, this resulted in a negative net cash flow of 1.9 billion Euro.
Speaker Change: The earnings performance of our battery business was characterized by the ongoing ramp up of production capacities, particularly in such good there in Valencia, there together with some restructuring burden led to a significant increase in the operating loss to a minus 1.1 billion euro.
Speaker Change: In conjunction with the increased investment volume. This resulted in a negative net cash flow of $1 9 billion Euro.
Arno Antlitz: Trading continued its positive momentum. Sales revenue were up 1% and benefited from positive market and product mix as well as better unit price realization despite a slight decrease in unit sales. Trajan again delivered a strong profitability of 9.1% driven by increased ARPU and an improved cost structure. Net cash flow at 2.5 billion Euro reflects this improved operating performance and has helped to deliver further. Overall, we are very pleased with the Trayton performance.
Speaker Change: Trade. Some continued its positive momentum sales revenue were up 1% and benefited from positive market and product mix as well as better unit price realization. Despite.
Speaker Change: A slight decrease in unit sales.
Speaker Change: Jason again delivered a strong profitability of nine 1% driven by increased Arpus and an improved cost structure and that cash flow at 2.5 billion Euro reflects this improved operating performance and that's helped to Delever further.
Speaker Change: Overall, we are very pleased with the trading performance.
Arno Antlitz: We are fully aware that the low free float of the Trayton share is an obstacle for many investors to invest and we continue to be open for a next step to increase the free float at the right time. It goes without saying that Volkswagen will remain a responsible and committed shareholder and will continue to hold 25% plus one share over the medium term.
Speaker Change: We are fully aware that the low free float off the trading share isn't obstacle for many investors to invest and we continue to be open for a next step to increase the free float at the right time.
Speaker Change: Groceries out, saying that folks Fung will remain the responsible and committed shareholder and will continue to hold a 25% plus one share over the medium term.
Arno Antlitz: Volkswagen Group Mobility recorded a slight increase in contract volume of 3% in the financial year. As expected, the operating result in the financial service division fell to around 3.1 billion Euro despite higher volumes in 2024. The continued normalization of used car prices, an inverted yield curve, and an increase in risk costs had a negative impact on earnings. In addition, the division recorded a negative valuation effect of around 200 million Euro from the decolonization of Vave Bank Russia.
Speaker Change: What makes one group mobility recorded a slight increase in contract volume of 3% in the financial year as expected. The operating result in the financial services Division failure to around $3 1 billion Euro despite higher volumes in 2024.
Speaker Change: The continued normalization of used car prices and inverted yield curve and an increase in risk costs had a negative impact on earnings.
Speaker Change: In addition, the division recorded a negative valuation effect of around 200 million euros from the deconsolidation of Bunk Russia.
Speaker Change: Yes.
Speaker Change: Hum.
Arno Antlitz: Expenditures on capex and R&D in the automotive division increased by around 5% overall to €37.9 billion in 2024. This corresponds to 14.3% of the division sales revenue and is at the upper end of the forecasted range. The upfront investments remain at a high level due to the considerable upfront expenditures in the battery and software divisions and the implementation of our regional strategies. continue assume that capital expenditure will have peaked in 2024. We expect a decline in the 2025 financial year, which should continue in subsequent years. In the 2025 to 2029 planning round, we expect investment spend to total €165 billion, €15 billion less than the prior year 2024 to 2028 planning round.
Speaker Change: Expenditures on Capex and R&D in the automotive division increased by around 5% overall to $37 9 billion Euro in 'twenty 'twenty for.
Speaker Change: This corresponds to 314.
Speaker Change: 14.3% off the division sales revenue and is at the upper end of the forecasted range.
Speaker Change: The upfront investments remain at a high level due to the considerable upfront expenditures in the battery and software divisions and the implementation of our regional strategies.
Speaker Change: Continuing assume that capital expenditure will have peaked in 2024.
Speaker Change: We expect a decline in 2020 five financial year, which would continue in subsequent years in 2025 to 22009 planning around we expect investment spend to total 165 billion Euro 15 billion less than the prior year 'twenty 'twenty four to 2020 eight planning around.
Arno Antlitz: We aim to achieve this by consistently utilizing synergies within the group and within the brand groups, more efficient R&D processes and structures, as well as effects from the joint venture with Rivian.
Speaker Change: We aim to achieve this by consistently utilizing synergies in the group and between the brand groups more efficient R&D processes and structures as well as effects from the joint venture with revision.
Arno Antlitz: Adjustments to the reporting logic from January 2025 onward. will lead, among other things, to a more precise disclosure of the automotive division sales revenue. In mathematical terms, this will lead to a lower investment ratio, namely by 130 basis points to 30 percent in the financial year 2024. Based on the adjusted reporting logic, we expect the investment ratio in the automotive division to reduce to between 12 and 30 percent in 2025 and around to 10 percent in 2027.
Speaker Change: Adjustments to the reporting logic from generate 20 to 25 one months.
Speaker Change: We lead among other things to a more precise to the closure of the automotive division sales revenue and met their medical terms. This really leads to a lower investment ratio, namely by 130 basis points to 13% in the financial year, 2020 four.
Speaker Change: Based on the Justice reporting logic, we expect the investments ratio in the automotive division to reduce to between 12 and 30% in 2025.
Speaker Change: They're on to 10% in 2027.
Speaker Change: Yes.
Arno Antlitz: As expected, the proportionate operating result of our joint ventures activities in China came in at 1.7 billion euro in the 2024 financial year. In a highly competitive market environment, we found a healthy compromise between profitability and volume. As a result, deliveries in China fell by 10% and market share by 2 percentage points. Earnings were also negatively impacted by high expenses in connection with the expansion of our local development activities and upfront expenditures for the upcoming renewal of the model portfolio.
Speaker Change: As expected the proportionate operating result of our trust ventures activities in China came in at 1.7 billion Euro in the 'twenty 'twenty four financial year.
Speaker Change: In a highly competitive market environment, we found a healthy compromise between profitable.
Speaker Change: And profitability and volume.
Speaker Change: As a result deliveries in China fell about 10% of that market share by two percentage points.
Speaker Change: Earnings were also negatively impacted by higher expenses in connection with the expansion of our local development activities in upfront expenditures for the upcoming renewal of the model portfolio.
Arno Antlitz: Over the next two years, we will be focusing on the development and market launch of new local models that we expect to be absolutely competitive in terms of design, technology and cost. Against this backdrop, we expect earnings in China to decline this year again between 0.5 billion euro and a billion euro before stabilizing from the end of 2025 onwards and showing a clearly positive trend in the coming years.
Speaker Change: Over the next two years Veeva there'd be focusing on the development and market launch of new local models that we expect to be absolutely competitive in terms of design technology and cost.
Speaker Change: Against this backdrop, we expect earnings in China to decline this year again between <unk> 5 billion Euro underbelly in Europe before stabilizing from the end of 2020 five onwards, and showing a clearly positive trend in the coming years.
Speaker Change: This brings me to the financial outlook for 2020 five financials Jim.
Arno Antlitz: This brings me to the financial outlook for the 2025 financial year. We expect a significant tailwind from our revamped model portfolio of fascinating cars and a slightly positive volume trend in the markets outside China. We expect the implementation of future Volkswagen and continued cost discipline to have a significant positive impact on the cost side. On the other hand, the expansion of BV volumes, particularly in Europe, as well as the ramp-up cost of the new models and our battery activities will have a negative impact on our earnings in 2025. Overall, we expect the Volkswagen Group's sales revenue to increase by up to 5%.
Speaker Change: We expect a significant tailwind from our revamped model portfolio, a fascinating costs and a slightly positive volume trend in the markets outside China.
Speaker Change: The implementation of future Fucks Fung and continued cost discipline drove a significant positive impact on the cost side.
On the other hand, the expansion of BV volumes, particularly in Europe, as well as a ramp up cost of the new models.
Speaker Change: And our battery activities will have a negative impact on our earnings in 2025.
Speaker Change: Overall, we expect the Fox one group sales revenue to increase by up to 5% operating return on sales is expected to be in the range between five five and six 5%.
Arno Antlitz: The operating return on sales is expected to be in the range between 5.5 and 6.5%, with a clearly weaker Q1 in terms of margin and subsequently cash flow. This outlook does not include possible effects from introduction of or adjustment of tariffs, rate tariffs, annual relaxation in the CO2 regulation in Europe, or additional provisions in connection with further restructuring measures in the group. The investment ratio in the automotive division is expected to be in the range of 12 to 13%.
Speaker Change: With a clearly weaker Q1 in terms of margin and subsequently cashflow.
Speaker Change: This outlook does not include possible effect from the introduction of <unk>.
Speaker Change: Or adjustment of tariffs trade tariffs any relaxation in the zero to regulation in Europe or additional provisions in connection with further restructuring measures in the group.
Speaker Change: Investments ratio in the automotive division is expected to be in the range of 12% to 13% automotive.
Arno Antlitz: Automotive net cash flow... should 34 to 37 billion euros.
Speaker Change: Automotive net cash flow.
Speaker Change: Should be in the range of two to 5 billion Euro. This includes cash outs of around 2 billion Euro in connection with the implementation of the restructuring measures and we expect net liquidity to be in the range of 34 to 37 billion Euro.
Arno Antlitz: Ladies and gentlemen, we cannot be entirely satisfied with this financial outlook. It reflects the current challenges in the global economy and the industry that is in the midst of a fundamental transformation. We need to keep up our combustion vehicles technologically competitive while investing in exciting electric models and software solutions. In order to be able to achieve this, it's crucial to continue to offer highly attractive vehicles to our customers and, at the same time, consistently reduce costs and increase profitability. This is exactly what we are focusing on in the coming months and years.
Speaker Change: Ladies and gentlemen, he cannot be entirely satisfied with this financial outlook to reflect the current challenges in the global economy and the industry that it's in the midst of a fundamental transformation.
Speaker Change: We need to keep up our combustion vehicles technology technologically competitive.
Speaker Change: While investing in exciting and electric models and software solutions.
Speaker Change: In order to be able to achieve that it's crucial to continue to offer a highly attractive vehicles to our customers and at the same time consistently reduce costs and increase profitability.
Speaker Change: This is exactly what we are focusing on in the coming months and years.
Oliver Blumer: Thank you very much so far and with that I hand it back to Oliver.
Oliver Blume: Thank you very much so far and with that I hand, it back to Oliver.
Oliver Blumer: Thank you very much, Arno, and I will take over once again for a quick outlook. These solid results form a strong basis for our year 25. 2025 will be the year in which the new power of Volkswagen Group becomes tangible. Because we have brought our company back into competitive shape in 2023 and 2024, we can now play our strengths again. For the year 2025, we have once again set ourselves an ambitious top 10 program with clear responsibilities and full transparency. 2025 is all about consistent cost management, attractive products and strengthening our presence in China and North America.
Oliver Blume: Yeah. Thank you very much on Earth and able to take over once again for a quick outlook.
Oliver Blume: These solid results from Mr Pharma strong basis for our young.
Oliver Blume: 25.
70, 75 will be the year in which the new power folks find group becomes tangible because we have brought our company back into competitive shape in 'twenty, three and 'twenty four.
Oliver Blume: We can now play our strengths again.
Oliver Blume: For the year 25, we have once again set ourselves an ambitious top 10 program was clear responsibilities and full transparency I'm twenty-five is all about consistent cost management attractive products and strengthening our presence in China and North America.
Oliver Blumer: We will make attractive offers over the entire life cycle of our cars. We will make our software strategy and our vehicle architecture even more resilient and continue to drive forward digitalization. We are focusing on the implementation of a holistic battery strategy and most importantly, we will do all this with a strong team and that will make especially the difference. Our product offensive continues in 2025. Around 30 new models will be launched worldwide across all brands in all segments. We will be playing to our strengths, our products, fascinating vehicles with which we want to position ourselves at the forefront of the competition.
Oliver Blume: We will make attractive offers over the entire lifecycle of our costs, we will make our software strategy and our vehicle architecture, even more resilient and continue to drive forward digitalization, we have pape, you're seeing on the implementation of a holistic battery strategy and most importantly, we will do all of this was this.
Oliver Blume: Drunk team.
Oliver Blume: And that will make especially the difference.
Oliver Blume: Our product offensive continues in 25 around 13, new models will be launched worldwide across all brands in all segments.
Oliver Blume: We will be playing to our strengths our products.
Oliver Blume: 19 vehicles.
Oliver Blume: With which we want to position ourselves at the forefront of the competition our customers can look forward to the new T. Iraq from folks pardon the new Audi Q3.
Oliver Blumer: Our customers can look forward to the new T-Roc from Volkswagen, the new Audi Q3, the Lamborghini Temerario, high emotional 911 derivatives from Porsche and many more inspiring vehicles. And we very much look forward to this year's IAA in Munich, where we will present our new urban electric car family, our entry-back models from Volkswagen, Skoda and Cupra. We are convinced that the future of mobility is electric, but we recognize that regions are adapting at different speeds, and we respect the wishes of our customers. Our brand portfolio across all drive variants has an answer to every customer demand and wish in all regions.
Oliver Blume: The Lamborghini Tim at audio.
Oliver Blume: Emotional 911th derivatives from Porsche and many more and thriving inspiring vehicles.
Oliver Blume: And we very much look forward to this year's I E. A M units, where we will present, our new urban electric car family our entry back models from Volkswagen score and coupon.
Oliver Blume: We are convinced that the future of mobility electric battery recognized that regions are adapting at different speeds and we expect this vicious of our customers.
Oliver Blume: Our brand portfolio across all drive very variance has an answer to every customer demands and wishing all regions. This flexibility is key to our success.
Oliver Blumer: This flexibility is key to our success. Where it makes sense, we supplement our combustion engines with plug-in hybrids. It can also be an option to combine electric cars as a range extender. In China, we are already seeing that vehicles with this technology are in high demand. Another proof point is a strong demand for the range extender version of Scout in the US. We will enter the market with range extenders and Volkswagen group models from 2026. This gives us strategic leeway.
Oliver Blume: Where it makes sense, we supplement our combustion engines with plug in hybrid. It can also be an option to combined electric causes a range extender in China. We are already seeing that we cause with this technology on high demand. Another proof point is a strong demand for the range.
Oliver Blume: The version of Scout in the U S. We will enter the market. This range extend this influx of Aden group models from 2026.
Oliver Blume: This gives us.
Oliver Blume: Our strategic leeway.
Oliver Blumer: In April, we will once again be a central part of the Shanghai Auto Show. At the Group Media Night, our brands will present their strong local product innovation for the world's largest automotive market. Important proof points for the stringent... execution of our in-China for China strategy, is catching up in decisive technology fields like automated driving, enhancing speed and reducing cost, and most importantly, launch our new product, Offensive, which will reach its full force in 2026 and 2027. All crucial milestones on our way to achieve a leading position in the era of intelligent, connected vehicles.
Oliver Blume: In April we will once again be a central part of the Shanghai Auto show, It's a group media night, our brands represent a strong local product innovation for the world's largest automotive market important proof points for the stringent.
Oliver Blume: Execution of our in China for China strategy is catching up and decisive technology fields like automated automated driving enhancing speed and reducing cost and most importantly lounge, our new product offensive, which will reach its full force in 'twenty six 'twenty seven odd crore.
Oliver Blume: Milestones on our way to achieve a leading position in the era of intelligent connected vehicles.
Oliver Blumer: Ladies and gentlemen, let me wrap it up at the end. In a demanding environment, we have delivered solid financial results, even as we navigate significant restructuring costs. We have taken key decisions with our software strategy, our in-China, for-China approach and with a future Volkswagen agreement. Further, we achieved important strategic milestones that will shape our future success. Our unparalleled model offensive in 2024 will continue into 2025, showcasing the new power of the Volkswagen Group. We are placing a specific focus on cost and investment discipline to ensure sustainable profitability, growth and competitiveness. For the full year, we expect a robust financial performance underpinned by our competitive product portfolio and improved supply situation.
Oliver Blume: Ladies and gentlemen, let me wrap it up at the end in a demanding environment and we have delivered solid financial results, even as we navigate significant restructuring costs.
Oliver Blume: We have taken key decisions with our software strategy, our in China for China approach and with a future folks voting agreement.
Oliver Blume: Further we achieved important strategic milestones that will shape, our future success, our unparalleled model offensive in 'twenty four will continue into 'twenty five showcasing the new power off the folks one group we are placing it.
Oliver Blume: And specific focus on cost and investment discipline to ensure sustainable profitability growth and competitiveness for the full year, we expect a robust financial performance underpinned by a competitive product portfolio and improved supply situation.
Rolf Woller: With that, let's start to the Q&A session and over to Rolf again. Thank you, Olli. Thank you, Arno, for this comprehensive overview.
Ralph: With that let's start the Q&A session and over to Ralph.
Oliver Blume: <unk>.
Speaker Change: Thank you Ali Thank you Arnaud for this comprehensive overview.
Rolf Woller: We will proceed now with the Q&A, and I should remind everyone who would like to ask a question to press star 9 and also to withdraw his question or her question. It would be the same combination, star 9. And we start right away with the first question. Nine star. Okay. So the other way around, I'm sorry. It's nine star to ask a question and to withdraw a question.
Speaker Change: We will proceed now with the Q&A and I should remind everyone.
Speaker Change: Who would like to ask a question press star nine and also to withdraw his question or a question. It would be the same combination star nine.
Speaker Change: And we start right away with the first question.
Speaker Change: Nine star Okay. So the other way round I'm, sorry, [laughter], it's nine star to ask a question then to withdraw question with that we start with that Tim will cross off from Deutsche Bank. Tim. Please go ahead.
Tim Rokossa: With that, we start with Tim Rokossa from Deutsche Bank. Tim, please go ahead. Thank you very much, Rolf. I seem to have hit the right combination on the keyboard.
Tim: Thank you very much Russ I seem to have hit the right combination of [laughter] on the keyboard.
Tim Rokossa: I have two questions, one probably to you, Olli. You are now in your third full year as a CEO. You addressed your priorities very strategically. You did products, partners, costs.
Tim: I have two questions one probably to you Ali you are now in your third full year as a CEO you addressed your priorities very strategically added products partners costs is it fair to assume that execution is next or are there. Other main priorities that you have to work through and if it is execution traditional on the cost side, rather weakness of VW how.
Tim Rokossa: Is it fair to assume that execution is next, or are there other main priorities that you have to work through?
Tim Rokossa: traditional on the cost side rather weakness of VW how do you make sure this time that is actually working beyond just a strong team that I know you care very much about Olli but rather thinking about progress updates and consequences if those progress updates are not really fulfilling what you had expected And secondly, probably to you, Arno, I think if I want to pick out two aspects that stood out of a very strong result this morning, it would A, be the free cash flow guide for 2025. Can we get some thoughts on why that is not improving earlier already?
What do you make sure. This time, that's actually working beyond just the strong team that I know you kept very much about Alibaba, Robert thinking about progress updates and consequences. If those progress updates are not really fulfilling what you had expected them to do and secondly, probably till you Arnaud I think if I want to pick out two aspects that stood out of a very strong result, this morning it would.
Tim: The free cash flow guide for 'twenty, five kind of get some thoughts on why that is not improving earlier already I know you're very much focused on that and be effect that you're seeing a stronger start into the year Q1, why is that and will this require a very strong H two bound of what Q2 already be something that.
Tim Rokossa: I know you very much focus on that. And B, the fact that you're seeing a stronger start into the year in Q1. Why is that?
Tim Rokossa: And will this require a very strong H2 bound or would Q2 already be something that...