WOLFSBURG (dpa-AFX) - The Volkswagen Group kept a tight rein on its finances in its core business at year-end, finishing the year with a stronger cash position than expected. The so-called net cash flow in the automotive segment—excluding financial services—is projected to reach around six billion euros in 2025, one billion above the previous year's figure, according to a statement from Wolfsburg on Wednesday evening. Investors were pleasantly surprised, as the group had previously forecast this key metric at zero billion. Additionally, after U.S. President Donald Trump withdrew his recent tariff threats against eight European countries, VW's preferred shares, listed on the DAX, rose significantly on Thursday.
The stock surged at Thursday's opening, climbing 5.8 percent to 104.60 euros. This leaves it virtually flat for the year to date. Last year, the share gained nearly 17 percent. However, it remains far below the highs of spring 2021, when prices topped 250 euros.
The market had only expected a cash inflow of just under one billion euros, wrote analyst Tom Narayan from Canadian bank RBC.
For analyst Philippe Houchois of U.S. investment bank Jefferies,
VW's performance is therefore a welcome surprise. The improvement apparently stems equally from a reduction in inventories and stockpiles, as well as lower capital expenditures. Market estimates for the group's operating result (Ebit) of 9.3 billion euros seem appropriate, as recent company comments have suggested.
With the better-than-expected cash inflow, net liquidity at year-end rose from 31 to 34 billion euros, according to the group. This, too, was better than previously indicated, VW noted. The German automaker attributed this to lower working capital requirements, as well as reduced investments in property, plant, and equipment, and in research and development, compared to initial plans.
The commercial vehicle holding company Traton had already reported a better cash inflow than initially forecast. For the truck and bus group, improvements in working capital—such as inventories and stockpiles—were responsible, along with lower capital expenditures at main brands MAN and Scania.
Cash flow is a financial metric that describes the development of a company's cash position. It includes results from day-to-day operations involving the production and sale of vehicles, as well as payments for investments and development.
If an automaker builds up more inventory or sells fewer cars than it produces, this can weigh on cash flow—or, conversely, boost it. For investors, this metric is particularly important as it provides insights into financial strength and the company's ability to pay dividends.
VW will publish its full-year results on March 10./men/mis/tav/jha/
