WOLFSBURG (dpa-AFX) - The Volkswagen Group sees a high need for investment spending this year. The Wolfsburg-based company plans to invest 13.5 to 14.5 percent of sales in development, products and plants, as announced in Wolfsburg on Friday. This is a record level, according to the DAX-listed company. The burden is only expected to ease in the following years - the proportion of revenue generated that is spent on research and investments in property, plant and equipment is set to gradually fall to 11 percent by 2027. Total investment expenditure in the years 2025 to 2029 is set to fall to 170 billion euros.

VW had estimated 180 billion euros for the five-year period between 2023 and 2027 and had already warned that 2024 would be a high hurdle to overcome. The Group has not yet provided any specific information for the five years between 2024 and 2028, but experts expect the budget for this period to remain unchanged. VW is spending a lot of money to defy the tough competition in the recently difficult Chinese market, especially in the electric car sector, to build battery cell factories and to further develop electric cars and combustion engines.

However, this will reduce the Group's freely available funds: this year, the Automotive division is expected to generate net cash inflows of 4.5 to 6.5 billion euros after investments and acquisitions for the PowerCo battery division - compared to 10.7 billion euros in the previous year. This startled investors. They sent the share price at the end of the DAX down by 5 percent. For some time now, financial analysts from investment banks in particular have been criticizing the fact that VW's money for capital expenditure is comparatively loose.

Group CEO Oliver Blume prepared the Group for a year of transition. "The clean-up work has been completed," he said according to the press release. The essential course for the restructuring of the Group has been set. "We can build on this in 2024 and have a solid basis for an accelerated ramp-up from 2025."

The prospects presented by Group CEO Olive Blume for day-to-day business in the construction and sale of models could not make up for this. Following strong sales growth in 2023, the manager expects revenue to grow by up to 5 percent this year. The operating return on sales - i.e. the proportion of revenue that remains as profit - should be 7.0 to 7.5 percent, if possible above the previous year's figure of 7.0 percent.

The billions in savings and earnings programs that VW has initiated in its brands should help. "Despite the subdued economic outlook and intense competition, we are therefore confident about 2024," said CFO Arno Antlitz. "We expect a tailwind from a large number of new product launches, a positive trend in product costs and continued cost discipline."

Last year, the Group's turnover climbed unexpectedly strongly by 15.5 percent to 322.3 billion euros thanks to a final spurt according to preliminary figures, also thanks to the already known increase in sales of almost 12 percent to 9.24 million vehicles. A higher proportion of newer and more expensive vehicles boosted turnover, as did higher sales prices.

However, the operating result only increased by a good two percent to 22.6 billion euros. The return on sales therefore fell from 7.9 to 7.0 percent. Among other things, higher product costs and valuation effects of raw material hedges, which had a negative impact of 3.2 billion euros on the balance sheet. VW expects some improvement in the new year and estimates the expected operating return on sales at 7.0 to 7.5 percent. Analysts had predicted a figure on a par with the previous year.

VW did not initially provide any information on net profit. The company will present detailed financial figures and the annual report on March 13. As expected, the dividend for the Dax-listed preference shares is to increase from 8.76 euros per share to 9.06 euros. Ordinary shares will each receive 6 cents less in profit participation in accordance with the articles of incorporation./fjo/men/jsl/he