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Despite Surge In Operational Profit, Volkswagen Cautions Of Risks Posed By The Ukraine War

Despite Surge In Operational Profit, Volkswagen Cautions Of Risks Posed By The Ukraine War
Volkswagen AG, Europe's largest automaker Volkswagen announced a surge in its profits for 2021 but also issued a caution that Russia's invasion of Ukraine and its impact on the company’s supply chains might have an unanticipated impact on the business of the company this year.
As Russia's invasion halts assembly lines and disrupts complicated supply chains, automakers are trying to locate alternate suppliers of essential parts built in Ukraine, including wire harnesses, from as far away as China and Mexico.
"The conflict ... has an impact on the entire global economy, on raw materials, on supply chains and therefore on our company," Volkswagen finance chief Arno Antlitz told journalists on Friday after publishing preliminary 2021 results.
"The impact of this cannot be conclusively assessed at this point in time," he said, adding the group was currently working on tapping other suppliers in Eastern Europe and North Africa to obtain wire harnesses.
Volkswagen warned that the current events in Ukraine's conflict might have a detrimental impact on its company. Russia's efforts in Ukraine are referred to as a "special operation."
After operational earnings rose to 19.3 billion euros ($21.1 billion) last year, the business recommended raising its annual dividend by more than half to 7.50 euros per ordinary share and 7.56 euros per preferred share for 2021.
Volkswagen claimed that higher pricing and a more favourable product mix helped it double its operating profit in 2021, and that it expected an operating margin on sales of 7.0 per cent to 8.5 per cent in 2022, compared to 7.7 per cent in 2021.
In 2022, sales are expected to climb by 8 per cent to 12 per cent, compared to a 12.3 per cent rise to 250 billion euros in 2017.
"However, this guidance is subject to the further development of the war in Ukraine and in particular the impact on the group's supply chains and the global economy as a whole," the company said.

Christopher J. Mitchell

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