Volkswagen reports 50% drop in its 2020 profit amid Covid 19 pandemic

The German carmaker says deliveries had recovered strongly in fourth quarter

Volkswagen reported a nearly 50 per cent drop in its 2020 adjusted operating profit on Friday but said car deliveries had recovered strongly in the fourth quarter, lifting its shares.

The world's largest carmaker said full-year operating profit, excluding costs related to its diesel emissions scandal, came in at €10 billion ($12.2bn), compared with €19.3bn in 2019.

Net cash flow at its automotive division was around €6bn and car deliveries picked up towards the end of the year, the German group said in a statement.

"The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020," it said.

Volkswagen's shares, which had been down as much as 2 per cent, turned positive and were up 1.5 per cent at €164.32 by 1158 GMT.

Sales at the automaker rose 1.7 per cent in December, at a time when new car registrations in Europe dropped nearly 4 per cent, data from the European Automobile Manufacturers' Association showed.

Like its rivals, Volkswagen is facing several challenges due to the coronavirus pandemic as well as a global shortage of chips needed for production.

It also sees tough competition in developing electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot-owner PSA to create the world's fourth-biggest automaker Stellantis adds to the pressure.

Volkswagen said on Thursday it missed EU targets on carbon dioxide (CO2) emissions from its passenger car fleet last year and faces a fine of more than 100 million euros.

The group is expected to release detailed 2020 figures on March 16.