FRANKFURT (Reuters) - Volkswagen Group said its full-year operating profit rose 22% to 16.9 billion euros ($18.5 bln) thanks to strong sales of higher-margin cars and lower diesel charges, defying an industry downturn that has cut the earnings of rivals.
Volkswagen is in the midst of ramping up sales of sports utility vehicles, which command better profits than ordinary cars, to 40% of passenger car sales from below 25% in 2018, while diesel related fines and settlements fell to 2.3 billion euros, down from 3.2 billion a year earlier.
Its strong performance led the car and truck making group to propose a dividend hike to 6.50 euros per ordinary share, up from 4.80 euros and 6.56 euros per preferred share, up from 4.86 euros in 2018.
Earlier this month rivals Ford and Daimler posted weaker earnings hit by trade wars and higher spending to build low emission cars.
VW predicted vehicle deliveries this year would be stable at 2019 levels despite a declining market.
“The paring back of diesel charges is positive but I am skeptical that they can keep their outlook given the dip in China sales thanks to corona,” Nord LB analyst Frank Schwope said.
Group vehicle deliveries rose 1.3% to 10.97 million last year, thanks to gains in Europe and south America as sales in Asia and the United States fell amid trade tensions.
The Wolfsburg-based company said market share rose in almost all regions, resulting in the rise in operating profit to 16.9 billion euros, which was up from 13.9 billion euros in 2018.
In terms of the operating profit for the group and the passenger cars division, VW forecast an operating return on sales in the range of 6.5% to 7.5% in 2020, but said this depended on external factors such as the geopolitical climate and the coronavirus outbreak.
($1 = 0.9201 euros)
Reporting by Edward Taylor; Editing by Michelle Martin and Elaine Hardcastle