Skoda Is Getting Fit For The Future With HPO

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Skoda Is Getting Fit For The Future With HPO
Skoda Is Getting Fit For The Future With HPO

Video: Skoda Is Getting Fit For The Future With HPO

Video: Skoda Is Getting Fit For The Future With HPO

After the sales record of the previous year, Skoda also presents top figures for sales and earnings. The company intends to continue on its growth path this year, as company boss Winfried Vahland said.

By Frank Mertens

Skoda has had a successful year - and the VW subsidiary wants to continue on its growth path in 2015 as well. After the Czech carmaker was able to sell more than a million vehicles (1,037,200 units) worldwide for the first time in 2014 and achieved a 12.7 percent increase in sales despite a difficult market environment, Skoda has now also set top figures for business figures.

Skoda sales grow to 11.8 billion euros

The company's sales grew by 13.9 percent to 11.8 billion euros and the operating result rose by as much as 56.5 percent to 817 million euros. The profit amounts to 665 million euros (+46 percent), the operating return on sales to seven percent (+1.9 percent). These figures would confirm Skoda's goal of profitable growth, said Skoda boss Winfried Vahland on Monday when presenting the financial results at the company's headquarters in Mlada Boleslav. "Consistent cost and efficiency management plays a central role", added Vahland.

As Vahland said, 2010 saw the start of the largest growth and model offensive. Since then, the model range has been expanded to seven model series. These include the bestseller Octavia and the small car Fabia. At the Geneva Motor Show, Skoda has just presented its new flagship, the Superb, which will soon be launched.

Almost a quarter of sales in China

Skoda Superb
Skoda Superb

Although the passenger car market in Western Europe had developed positively and achieved an increase of 4.9 percent there, there was no reason for euphoria. "We are still a long way from previous highs." Skoda suffered in Russia, where a decline of ten percent was recorded as a result of the Ukraine crisis. On the other hand, the Czechs in China were able to grow by 12.1 percent with 281,400 units. This means that 24 percent of total sales are now on the Chinese market. The deliveries in China are not counted as part of Skoda's sales.

Head of Sales Werner Eichhorn cannot see any worries that one is becoming too dependent on a market like China. Rather, he sees further potential in China. "We currently have a market share of 1.5 to 1.6 percent in China, although we are not even represented there with our entire range of models." For Eichhorn, Skoda has the chance to gain a market share in China similar to that in Western Europe. There the Czechs were able to grow by 0.2 percentage points to 3.4 percent last year.

Skoda's HPO is not a cost-cutting program

In order for Skoda to be able to continue its successful course unchanged in the future, one must "be adaptable and fast, make the company more flexible, agile and modern", says Vahland. As the Skoda boss emphasized, the carmaker had to adapt to the increasing demands of the business. So that this succeeds, the "High Performance Organization" (HPO) project has been launched. "It's about keeping Skoda strong and thus competitive for the future," said Vahland. HPO is expressly not a cost-cutting program, as the Skoda boss stated. "We don't want to cut staff. The opposite is the case."

As HR director Bohdan Wojnar said, in view of the increasing digitization, the company has to adjust to the coming challenges, which is why HPO was dealt with "in the current good times". "Those who do not adapt will be adapted," said Wojnar. For example, the organizational structure has been simplified and the decision-making processes have been optimized.

Markets remain challenging

After Skoda was able to increase its sales by 7.9 percent in the first two months compared to the same period of the previous year, a new record should also be achieved this year. "The successful start to the year makes us confident that we will gain further growth in 2015. However, the general conditions in the markets remain challenging." Vahland said the target of 1.5 million deliveries is now being targeted. This mark should be reached by 2018. In view of the difficult and unpredictable market in Russia, Vahland did not want to say whether this could also succeed earlier. But do everything possible to get there as quickly as possible.

As CFO Winfried Krause said, since 2010 it has not only been possible to achieve an average operating result of 648 million euros, but also to improve the financial result substantially. "This is a remarkable achievement against the background of the sometimes adverse market conditions." Krause said that despite the uncertain framework conditions in Eastern Europe and exchange rate risks, a good financial result is also expected for 2015.

Skoda plans without Fabia RS

The Skoda Fabia RS is the sportiest variant of the series
The Skoda Fabia RS is the sportiest variant of the series

Skoda will continue its model offensive in 2016 with another SUV above the Yeti. "With this model, we are currently already on the home stretch," said Vahland. Another, a third SUV in the portfolio is also possible. But nothing has been decided here.

As development director Frank Welsch emphasized, there will be no successor to the Fabia RS. Customer demand was simply too low here, and this has nothing to do with cost savings. If the demand situation changes, one can react quickly to it technically.