Results

Skoda's profits up 87% to €652 m

Parvatha Vardhini C. Prague | Updated on November 14, 2017 Published on March 22, 2012




Skoda Auto's profits for the year ending December 2011 rose 87 per cent over a year ago, to €652 million. The company declared its results today. Robust volumes and improved model mix (from increased sales of Yeti, Superb and Laura) helped growth. Sales grew 18 per cent to €10.2 billion while volumes recorded a 15 per cent growth to 8.8 lakh cars worldwide.

While sales in Western Europe and India remained sluggish, Russia and China posted good growth in volumes.

Despite an increase in the value of the Czech crown vis-à-vis the euro, and higher commodity prices, Skoda managed to improve its operating margins to 7.2 per cent from 5.1 per cent in 2010. Price hikes, higher realisations and cost savings helped boost margins.

Outlook

Asked whether margins could be improved upon further (taking the example of double digit margins enjoyed by Indian manufacturers), Mr Winfried Krause, CFO, said, “On a worldwide basis, only few companies make margins like 10 per cent — usually the premium segment car makers like Audi, BMW. We are very well-placed when we compare ourselves with volume manufacturers.”

Commenting on the outlook for 2012, Mr Krause said, “The recession anticipated last year looks less likely than it did nine months ago. Although there is a good amount of uncertainty, I would expect growth in India and China. It looks less good in Western and Central Europe.”

Growth strategy

The company is also looking at India, China and Russia to help drive a sales target of 15 lakh cars a year by 2018. The Rapid, a compact saloon introduced in India, is part of this strategy. The company plans to build three different versions of the Rapid for China, Europe and Russia.

Skoda may think of making India an export hub for the Rapid in the long-run, said Mr Jurgen Stackmann, Skoda's Board Member and Director (Sales and Marketing).

Skoda may also develop its own platforms for India instead of sharing it with Volkswagen, he added.

“While Skoda is in the second stage of development in India, Volkswagen is in the first stage. So, as we develop, we may go (our) separate ways,” he said.

Skoda also launched its Citigo compact in the Czech market this year. It will be introduced in the rest of Europe shortly.

(The writer's visit has been sponsored by the company.)

Published on March 22, 2012

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