FRANKFURT -- Volkswagen Group's provisions for the diesel-cheating scandal rose to 22.6 billion euros ($23.9 billion), as the company continues to tally damages from the worst business crisis in its history.
The company took a charge of 4.4 billion euros in the fourth quarter to reflect a settlement related to tainted larger diesel engines and a criminal plea in the U.S.
VW Group's operating profit before special items rose 14 percent to 14.6 billion euros last year, helped by record sales of Audi and Porsche cars.
VW booked one-off charges of 7.5 billion euros in 2016, of which 6.4 billion were related to the emissions-test rigging scandal. Including those charges, VW made a 2016 operating profit of 7.1 billion euros, a big swing from a loss of 4.1 billion euros in 2015.
The company's sales margin rose to 6.7 percent from 6 percent a year earlier, VW said in a statement Friday.
VW forecast broadly stable earnings this year.
“In spite of the charges and the challenges arising from the diesel crisis, we can be satisfied on the whole with the group’s business development,” Chief Financial Officer Frank Witter said in the statement. “We must use great discipline to achieve the set targets in all divisions, in order to return to the path of success in the coming years.”
VW is still wrestling with the fallout from admitting that it rigged as many as 11 million diesel cars worldwide to cheat on emissions tests. Total costs of penalties and vehicle buybacks and fixes in North America alone have exceeded $23 billion, while in Europe, cars will be fixed but customers aren’t being compensated. Volkswagen also still faces hundreds of investor lawsuits and a criminal probe in Germany.
Even with the burdens for the scandal, VW plans to pay a dividend of 2.06 euros per non-voting preferred share, the company’s mostly widely held stock, and 2 euros per common share for 2016. That is up from 0.17 euros and 0.11 euros respectively a year earlier, when VW had to cut the dividend because of the cost of the diesel emissions cheating
Shareholder approval is effectively a formality as almost 90 percent of the voting stock is held by the Porsche-Piech billionaire clan, its home state of Lower Saxony, and Qatar. Payouts amounted to 17 cents per preferred share and 11 cents per common stock for 2015, when the company posted its highest pre-tax loss ever because of the scandal.
Despite its tarnished reputation, Volkswagen surpassed Toyota Motor Corp. last year as the world’s best-selling automaker, thanks to growth in China, where the scandal hasn’t been an issue.
Car deliveries in 2017 will “moderately exceed” last year’s volume “amid persistently challenging market conditions,” according to the statement. Economic growth, intense competition, volatile exchange rates and fallout from the diesel crisis will weigh on sales.
Reuters contributed to this report