Daily Management Review

Lack of Clarity over Allocation for Emission Scandal Forces VW to Postpone 2015 Results


02/05/2016




Lack of Clarity over Allocation for Emission Scandal Forces VW to Postpone 2015 Results
As the company struggles and continues to grapple with the effects of the emissions test rigging scandal that hit it late last year, German carmaker Volkswagen said it would push back publication of 2015 results and its annual shareholders' meeting.
 
Volkswagen (VW) still lacks a technical solution for almost 600,000 diesel cars and is facing a growing number of legal allegations and law suits potentially running into millions even after more than four months after the scandal broke in the United States.
 
The annual result of the company was slated to be released in full on March 10. But there have been continuous and numerous meetings among the top players on VW's supervisory board who have been meeting more frequently lately to discuss among other things how to account for the scandal in the carmaker's annual results. Analysts say that the delaying of the results is indicative that the company is yet to arrive at a decision about how to account for the scandal.
 
Quoting a person familiar with the matter, Reuters reported that critical individuals who comprise the core of the 20-member supervisory board of VW had met again on Wednesday and held a discussed about how to tackle the situation and to what extent Volkswagen would need to incorporate provisions for the scandal in the 2015 results.
 
Citing "remaining open questions and the resulting valuation calculations relating to the diesel emissions issue", VW said on Friday it would set new dates for the 2015 results and its annual shareholders' meeting, initially planned for April 21.
 
“In this regard, Volkswagen will achieve the best possible transparent and reliable outcome for its shareholders and stakeholders. Before special items Volkswagen anticipates the Operating Result for the Group at the level of the prior year within the expected range for fiscal year 2015,” the company said in a statement.
 
A report to clarify "the background and responsibilities" related to the emissions scandal would be provided by the company in the second half of April, VW said in the statement.
 
The difficulty that the company is facing to prepare accurate financial statements in the face of official investigations in the United States and other countries and lawsuits by thousands of aggrieved Volkswagen owners is evident form the decision of the company to postpone the annual report and the annual general meeting in a highly unusual delay.
 
The company has to bear the cost of recalling 11 million vehicles equipped with illegal software intended to deceive official emissions tests as well as potential requirement to pay billions of dollars, if not tens of billions, in fines and legal settlements. However the exact amount is not clear.

The scandal had forced VW to accept in September 2015 that it had installed so-called defeat devices in cars with diesel engines to get around limits on nitrogen oxide pollutants linked to lung ailments.  This number included around 600,000 cars in the United States.
 
(Sources:www.reuters.com & www.volkswagenag.com) 






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