By Christoph Steitz and Tom Sims
FRANKFURT (Reuters) -Volkswagen AG, Europe’s largest carmaker, said on Friday that Russia’s invasion of Ukraine and its impact on supply chains could dent business this year, adding 2021 operating profit had doubled despite lower vehicle sales.
The company also proposed to raise its annual dividend by more than half to 7.50 euros per ordinary share and 7.56 euros per preferred share, after operating profit rose to 19.3 billion euros ($21.1 billion).
Carmakers are scrambling to find alternative sources of vital parts made in Ukraine from as far afield as China and Mexico, as Russia’s invasion halts assembly lines and breaks complex supply chains.
“There is a risk that the latest developments in the war in Ukraine will have a negative impact on the Volkswagen Group’s business. This may also result from bottlenecks in the supply chain,” the company said.
The doubling of operating profit in 2021 was thanks to higher prices and a more favorable product mix, Volkswagen said. The company said it expects an operating margin on sales of 7.0%-8.5% in 2022, compared with 7.7% in 2021.
“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.
Russia calls its actions in Ukraine a “special operation.”
($1 = 0.9162 euro)
(Reporting by Christoph Steitz and Tom Sims in FrankfurtEditing by Matthew Lewis)
