– PROFIT AFFECTED BY THE CZECH KORUNA
The first-half 2008 economic results published today show that, Škoda Auto, the largest company in the Czech Republic, has not been able to compensate for losses caused by the strong Czech Koruna despite a considerable increase in production volume.
For the first half of 2008, the Škoda Auto Group has contributed to the overall profit of the Volkswagen Concern with an operating profit of 381 million €. The increase in turnover of 25 million €, (+ 7 %) compared to last year, was negatively affected by the development of the Czech Koruna exchange rate.
The influence of the strength of the Czech Koruna in comparison to other world currencies has been manifested even more clearly in a local financial statement. Turnover reached 111.7 billion CZK (-1.6 %) and the operating profit, 9.6 billion (- 3.9%).
"For the first time since we began reporting according to the International Financial Reporting Standards (IFRS) Methodology in 2005, a decrease in the values of all significant financial parameters has occurred," Board of Directors Member Holger Kintscher commented.
Kintscher continued, "Naturally, the strengthening exchange rate of the Koruna against all important world currencies slows us down as the biggest exporter in the Czech Republic. Therefore, although our sales volume has increased, we have experienced some drop in revenue. Compared to the first half of 2007, our current operating profit is burdened by negative exchange rate effects worth 2.3 billion CZK.’
For the first half of 2008, vehicle production has increased 11.2% (353,818 cars) compared to the same period in 2007. There was a considerable rise in the production of the Škoda Fabia and Škoda Octavia model series. It is expected that the production volume of Škoda Superb, which was temporarily reduced by the shift to a new generation model, will be balanced in the next few months.
In the reporting period, deliveries to customers increased by 17.9% compared to last year, to a total of 366,666 cars. The Škoda brand was most successful in Eastern Europe (63,684 cars; +40.1%),where the markets of Russia with 23,950 cars (+83.7%) and Ukraine with 15,964 cars (+51.2%) confirmed the expected growth pattern. The Group also sold 31,566 cars in the world’s fastest growing market, China, (where sales began in July 2007) and 9,556 cars in India (+61.6%).
"The situation is complicated. Apart from traditional negative external effects (such as the price of oil, steel and precious metals), we need to consider the development of the Czech Koruna as another significant risk factor. Our priority now is to minimize the impact of all these extreme influences," Holger Kintscher sums up.
1-6/2008 1-6/2007 2008/2007 (%)
Deliveries to Škoda customers vehicles tsd. 366,7 311,1 17,9
Sales total* vehicles tsd. 353,4 315,5 12,0
Production total** vehicles tsd. 353,8 318,2 11,2
Number of employees*** persons 29 312 28 083 4,4
Sales CZK millions 111 685 113 539 -1,6
Gross profit CZK millions 16 344 18 836 -13,2
Operating profit CZK millions 9 644 10 034 -3,9
Profit before income tax CZK millions 9 500 10 042 -5,4
Profit after income tax CZK millions 7 151 7 895 -9,4
Investment (incl. activated development costs) CZK millions 4 326 3 827 13,0
Cash flow from operating activities CZK millions 12 374 17 123 -27,7
Net liquidity CZK millions 28 158 34 059 -17,3
*) including sales of manufactured by other Volkswagen Group brands (Škoda Auto Slovensko – SAS and
Škoda Auto India Private Ltd. – SAIPL)
**) including production of vehicles for other Volkswagen Group brands (Volkswagen- and Audi-brand vehicles by SAIPL)
***) Number of employees as at June 30, 2008 including agency-supplied staff
Jaroslav Černý, Bertil Müller www.skoda.lu
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