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More than four months after the scandal broke in the United States, Europe’s leading carmaker is still to come up with a technical fix for almost 600,000 diesel cars and is facing a growing number of legal claims. Photo: AP
More than four months after the scandal broke in the United States, Europe’s leading carmaker is still to come up with a technical fix for almost 600,000 diesel cars and is facing a growing number of legal claims.
Photo: AP

Volkswagen delays 2015 results, AGM as scandal effects unclear

Volkswagen delays its annual shareholders' meeting as the German carmaker struggles to put an exact price on its diesel emissions scandal

Berlin: Volkswagen has postponed publication of its financial results for 2015 and delayed its annual shareholders’ meeting as the German carmaker struggles to put an exact price on its diesel emissions scandal.

More than four months after the scandal broke in the United States, Europe’s leading carmaker is still to come up with a technical fix for almost 600,000 diesel cars and is facing a growing number of legal claims.

Uncertainty about the financial impact of Volkswagen’s biggest-ever corporate scandal on its accounts has increased since the start of the year.

US regulators last month rejected Volkswagen’s original plan to fix 2.0 litre diesel cars equipped with software capable of violating emissions rules, raising concerns that Volkswagen may have to carry out a larger number of costly vehicle buybacks in the world’s second-biggest auto market.

In Europe, Volkswagen is facing demands from the European Commission and lawmakers to consider compensating Volkswagen drivers in a way comparable with a scheme in the US where the carmaker has promised goodwill packages worth $1,000 each to tens of thousands of owners of Volkswagen vehicles.

Leading figures on Volkswagen’s supervisory board have been meeting more frequently lately to discuss the crisis, including how to account for the scandal in Volkswagen’s annual results which were originally due to be released on March 10, sources familiar with the matter said.

Volkswagen said on Friday that “remaining open questions and the resulting valuation calculations relating to the diesel emissions issue" caused the delay.

A source at the carmaker said 2015 results and the annual shareholders’ meeting, due to be held on 21 April, would both be delayed by 4-6 weeks.

Volkswagen shares traded 4% higher at 3.15pm GMT and analysts said the delay was a sensible step.

“Under such extreme circumstances, this decision is understandable," Frankfurt-based Bankhaus Metzler analyst Juergen Pieper said, citing “new unknowns" that auditors need to digest as they process the carmaker’s annual report.

Provisions taken

At a meeting on Wednesday, the inner circle of the 20-member supervisory board discussed to what extent Volkswagen would need to incorporate provisions for the scandal in its 2015 results, a person familiar with the matter told Reuters.

The Wolfsburg-based group already set aside €6.7 billion ($7.5 billion) in the third quarter of 2015 to cover repair costs for vehicles worldwide. Pieper said those provisions could need to be topped up again by another €2-3 billion.

Volkswagen said it expects an operating group result before special items “at the level of the prior year within the expected range for fiscal 2015".

The manufacturer previously guided for the group operating margin to come in between 5.5 and 6.5%, after 6.3% in 2014 when operating profit set a new record at €12.7 billion.

Evercore ISI analyst Arndt Ellinghorst welcomed the profit guidance.

“Underlying operations have not seen a notable deterioration as a result of the diesel scandal and accompanying negative headlines," said Ellinghorst who has a “buy" rating on Volkswagen stock.

Volkswagen said it still aimed to provide a report on the investigation into the scandal by US law firm Jones Day in the second half of April, adding the findings will clarify “the background and responsibilities" related to it.

Volkswagen said it will announce new dates for the publication of 2015 results and the AGM “as soon as possible." Germany’s Securities Trading Act compels companies to publish their annual reports no later than four months after the end of their fiscal year. Reuters

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