VW set aside $18.2 to cover costs of cheating

VW set aside 16.2 billion euros ($18.2 billion) to cover the costs of the cheating, up from the previous amount of 6.7 billion euros, Europe’s largest carmaker said in a statement on Friday.

The manufacturer cut its annual dividend 97 percent to 0.17 euros per preferred share, the lowest since at least 2000. The stock, which closed down 1.3 percent for its first decline in a week, has surged 45 percent since hitting a post-scandal low in October.

“The current crisis — as the figures presented today reveal — is having a huge impact on Volkswagen’s financial position,” Chief Executive Officer Matthias Mueller said in the statement, adding that the “repercussions of the emissions issue are now quantifiable.”

A report on how the manipulations were carried out and covered up for so many years won’t be concluded until the fourth quarter, more than a year after the scandal became public. Volkswagen has two months to finalize a U.S. agreement on fixing or buying back tainted cars there and still faces fines and a criminal investigation. Meanwhile, a recall of some 8.5 million affected autos in Europe has gotten off to a slow start.

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For 2016, Volkswagen forecast flat deliveries and a drop in revenue of as much as 5 percent amid what the automaker called a “challenging environment.” Its operating profit is projected to be between 5 percent and 6 percent of sales, compared with 6.3 percent in 2014.

As a consequence of the crisis, the variable compensation of a typical Volkswagen top management will be cut 39 percent to 3.2 million euros, the company said Friday in a statement. The payouts had sparked a heated debate as workers and the German state of Lower Saxony, the company’s second-largest shareholder, balked at generous bonuses.
The scandal erupted in September when the U.S. Environmental Protection Agency announced that the carmaker had used illicit engine-control software to dupe emissions tests. Chief Executive Officer Martin Winterkorn was forced to resign within days as the automaker’s stock lost billions in value. Volkswagen has been battling since then to appease regulators and regain customer trust after ultimately admitting to rigging the exhaust systems of 11 million diesel-powered cars worldwide.