(new: closing price, statements by CFO)

WOLFSBURG (dpa-AFX) - The Volkswagen Group sees a high need for investment spending this year. The Wolfsburg-based company plans to invest 13.5 to 14.5 percent of sales in development, products and facilities, as announced in Wolfsburg on Friday. This is a record high, according to the DAX-listed company. The car manufacturer's shares fell significantly.

The burdens are only expected to ease in the following years - the proportion of income generated that goes on research and investments in property, plant and equipment is set to gradually fall to 11 percent by 2027. Total investment expenditure in the years 2025 to 2029 is to be limited to 170 billion euros.

VW had estimated 180 billion euros for the five-year period between 2023 and 2027 and had already warned that 2024 would be a high hurdle to overcome. The Group has not yet provided any specific information for the five years between 2024 and 2028, but experts expect the budget for this period to remain unchanged. VW is spending a lot of money to defy the tough competition in the recently difficult Chinese market, especially in the electric car sector, to build battery cell factories and to further develop electric cars and combustion engines.

However, this reduces the Group's freely available funds. In the previous year, VW achieved a high net cash inflow of 10.7 billion euros after investments in the automotive sector, partly thanks to a sharp reduction in inventories in the fourth quarter, as CFO Arno Antlitz said in an internal interview with the dpa news agency. According to the manager, this was a one-off effect, and there are now significant investments in future fields, particularly in the battery division. "Accordingly, we are only expecting a net cash flow of 4.5 to 6.5 billion euros for 2024 - an absolute lower limit in our business," Antlitz added.

These prospects startled investors. They sent the share price at the end of the Dax down by almost 5 percent. Analyst Romain Gourvil from Berenberg Bank spoke of solid annual figures and a solid outlook - however, the forecast for the inflow of funds left a lot to be desired. Investors could also have expected a little more ambition in terms of margins, he wrote. Financial analysts have long criticized the fact that money for investment spending at VW is comparatively loose.

Group CEO Oliver Blume prepared the Group for a year of transition. "The clean-up work has been completed," he said according to the press release. The essential course for the restructuring of the Group has been set. "We can build on this in 2024 and have a solid basis for an accelerated ramp-up from 2025."

Following strong sales growth in 2023, the Group CEO expects earnings to grow by up to 5 percent this year. The operating return on sales - i.e. the proportion of revenue that remains as profit in day-to-day business - should be 7.0 to 7.5 percent, if possible above the previous year's figure of 7.0 percent.

The billions in savings and earnings programs that VW has initiated in its brands are intended to help. "Our turnover has increased significantly. However, the bottom line is the same. And with a margin of 7 percent, we are still some way off our competitors' returns," said Antlitz. "This applies in particular to our volume brands, especially the Volkswagen brand."

The car manufacturer has largely worked off the high order backlog from the chip shortage, said the CFO. "Incoming orders are currently still below our plans for 2024 - particularly in the BEV segment," he said with regard to fully electric battery-powered vehicles (BEV). "2024 will demand a lot from us."

Last year, thanks to a final spurt, the Group's turnover climbed unexpectedly strongly by 15.5 percent to 322.3 billion euros according to preliminary figures, also thanks to the already known sales growth of almost 12 percent to 9.24 million vehicles. A higher proportion of newer and more expensive vehicles boosted turnover, as did higher sales prices.

However, the operating result only increased by a good two percent to 22.6 billion euros. The return on sales therefore fell from 7.9 to 7.0 percent. Among other things, higher product costs and valuation effects of raw material hedges, which had a negative impact of 3.2 billion euros on the balance sheet. VW expects some improvement in the new year and estimates the expected operating return on sales at 7.0 to 7.5 percent. Analysts had predicted a figure in line with the previous year.

VW did not initially provide any information on net profit. The company will present detailed financial figures and the annual report on March 13. As expected, the dividend for the Dax-listed preference shares is to increase from 8.76 euros per share to 9.06 euros. Ordinary shares will each receive 6 cents less in profit participation in accordance with the articles of association./men/fjo/jsl/jha/