Volkswagen warns of risks from Ukraine crisis as operating profit doubles By Reuters

© Reuters. The identity. Volkswagen brand’s iconic vehicle Buzz is seen during its world premiere in Paris, France, March 9, 2022. REUTERS/Benoit Tessier

By Christoph Steitz and Tom Sims

FRANKFURT (Reuters) – Volkswagen AG, Europe’s biggest carmaker, said on Friday that Russia’s invasion of Ukraine and its impact on supply chains could hurt business this year, adding earnings from 2021 operations had doubled despite lower vehicle sales.

The company also proposed to increase its annual dividend by more than half to 7.50 euros per ordinary share and 7.56 euros per preferred share, after operating profit reached 19.3 billion euros (21 .1 billion dollars).

Automakers are scrambling to find other sources of vital Ukrainian-made parts from China and Mexico as the Russian 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 activities of the Volkswagen Group (DE:). This could also result from bottlenecks in the supply chain,” the company said. .

The doubling of operating profit in 2021 was due to higher prices and a more favorable product mix, Volkswagen said. The company said it expects an operating margin on sales of 7.0% to 8.5% in 2022, from 7.7% in 2021.

“However, these directions are 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”.

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