Volkwagen’s CFO says German plants must get more efficient

BERLIN: Volkswagen’s finance chief said on Thursday its labour force would need to shrink if its German factories did not become more efficient and that the group’s dividends would fall in line with earnings.

“Today, our German plants are not competitive. Without improving their efficiency and performance, we cannot maintain current employment levels,” chief financial officer Arno Antlitz said at a Goldman Sachs conference in London, according to excerpts of his speech seen by Reuters.

“We need to fully utilise plant capacity … In a shrinking market, this inevitably leads to discussions about closing some plants in Germany,” he said.

Labour representatives have repeatedly called on Volkswagen executives and shareholders, including the Porsche and Piech families, which own a third of the Volkswagen Group, to contribute to cost savings by accepting a reduced dividend.

Speaking in London, Antlitz said the proposed dividend would fall accordingly with earnings.

Volkswagen were down a third in the first nine months of its financial year, which would translate to a dividend of €6.75 versus €9 last year, based on LSEG estimates.

Antlitz said the automaker was committed to a payout ratio of at least 30% of earnings after tax.

“It goes without saying that, as a member of the executive board, I am fully committed to contribute my part to reduce costs,” Antlitz added, without providing further details.

A 30% payout is about in-line with analysts’ current consensus forecast, potentially reassuring investors about dividend prospects amid pressure from unions for cuts.

This, though, does not include any provisions for or costs from the ongoing restructuring process, which analysts say would knock earnings and therefore lower the payout accordingly.

Analysts say pressure will remain on Volkswagen to cut the payout ratio further, though they reckon a €5 billion payout may be the minimum that would be acceptable to Porsche, which is controlled by the Porsche and Piech families.

Volkswagen’s VW dividend is one of the most important cash sources for Porsche SE.

Volkswagen’s Frankfurt-listed shares hit their highest for the day after the comments, trading up 1% at 1508 GMT.