Financial Position


PRINCIPLES AND GOALS OF FINANCIAL MANAGEMENT

Liquidity management, currency, interest rate and commodity risk management, as well as credit and country risk management, are the core elements of financial management at the Volkswagen Group. This is performed centrally for all Group companies except Scania by Group Treasury, based on internal directives and risk parameters.

With regard to liquidity, the goals of financial management are to ensure that the Volkswagen Group remains solvent at all times and to achieve an adequate return from the investment of surplus funds. The aim of currency, interest rate and commodity risk management is to hedge the prices on which investment, production and sales plans are based using derivative financial instruments. The goal of credit and country risk management is to use diversification to avoid exposing the Volkswagen Group to the risk of loss or default.

To achieve this diversification, internal limits are defined for the volume of business per counterparty when entering into financial transactions. In setting these limits, various rating criteria are taken into account, including the ratings awarded by independent agencies and the equity base of potential counterparties. The Executive Committee for Liquidity and Foreign Currency approves risk limits, authorized financial instruments, and hedging methods and horizons.

For more information on the principles and goals of financial management, please refer to the Notes to the 2009 Consolidated Financial Statements chapter Financial risk management as well as to the Risk Report chapter Financial risks.

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CASH FLOW STATEMENT BY DIVISION

 

 

 

 

 

 

Volkswagen Group

 

Automotive1

 

Financial Services

€ million

 

2009

 

20082

 

2009

 

20082

 

2009

 

20082

1

Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.

2

Adjusted.

3

These relate mainly to fair value measurement of financial instruments, application of the equity method and reclassification of gains/losses on disposal of noncurrent assets to investing activities.

4

Before consolidation of intra-Group transactions: €13,306 million (€8,774 million).

5

Cash and cash equivalents comprise cash at banks, checks, cash-in-hand and call deposits, excluding time deposit investments.

Profit before tax

 

1,261

 

6,608

 

603

 

5,677

 

657

 

931

Income taxes paid

 

–529

 

–2,075

 

–265

 

–1,973

 

–264

 

–102

Depreciation and amortization expense

 

8,877

 

8,438

 

6,740

 

6,680

 

2,137

 

1,758

Change in pension provisions

 

135

 

140

 

130

 

132

 

5

 

8

Other noncash income/expense and reclassifications3

 

–118

 

583

 

–623

 

429

 

505

 

154

Gross cash flow

 

9,626

 

13,694

 

6,585

 

10,944

 

3,040

 

2,750

Change in working capital

 

3,116

 

–10,992

 

6,230

 

–2,144

 

–3,114

 

–8,848

Change in inventories

 

4,155

 

–3,056

 

3,820

 

–2,688

 

335

 

–368

Change in receivables

 

465

 

–1,333

 

750

 

–1,130

 

–285

 

–203

Change in liabilities

 

260

 

815

 

193

 

1,100

 

67

 

–285

Change in other provisions

 

1,525

 

369

 

1,457

 

382

 

68

 

–13

Change in leasing and rental assets (excluding depreciation)

 

–2,571

 

–2,734

 

–48

 

–105

 

–2,523

 

–2,629

Change in financial services receivables

 

–719

 

–5,053

 

57

 

297

 

–777

 

–5,350

Cash flows
from operating activities

 

12,741

 

2,702

 

12,8154

 

8,8004

 

–74

 

–6,098

Cash flows
from investing activities

 

–10,428

 

–11,613

 

–10,252

 

–11,479

 

–176

 

–134

of which: acquisition of
              property, plant and
              equipment

 

–5,963

 

–6,896

 

–5,783

 

–6,773

 

–180

 

–122

capitalized development costs

 

–1,948

 

–2,216

 

–1,948

 

–2,216

 

 

acquisition and disposal of equity investments

 

–2,669

 

–2,596

 

–2,667

 

–2,571

 

–3

 

–25

Net cash flow

 

2,313

 

–8,911

 

2,563

 

–2,679

 

–250

 

–6,232

Change in investments in securities and loans

 

753

 

430

 

509

 

496

 

244

 

–66

Cash flows from financing activities

 

5,536

 

8,123

 

5,497

 

942

 

39

 

7,181

Changes in cash and cash equivalents due to exchange rate changes

 

190

 

–113

 

155

 

–57

 

35

 

–56

Net change in cash and cash equivalents

 

8,792

 

–471

 

8,724

 

–1,298

 

69

 

827

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at Dec. 315

 

18,235

 

9,443

 

16,362

 

7,639

 

1,873

 

1,804

Securities and loans

 

7,312

 

7,875

 

5,701

 

5,679

 

1,611

 

2,196

Gross liquidity

 

25,547

 

17,318

 

22,063

 

13,318

 

3,484

 

4,000

Total third-party borrowings

 

–77,599

 

–69,555

 

–11,427

 

–5,279

 

–66,172

 

–64,276

Net liquidity

 

–52,052

 

–52,237

 

10,636

 

8,039

 

–62,688

 

–60,276

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