- Dividend follows lack of Scania's payments to VW in 2013, 2014
- VW sees diesel-motor rigging costs exceeding 6.7 billion euros
Volkswagen AG raised 9.6 billion kronor ($1.13 billion) from Swedish truck division Scania in 2015, equivalent to three years of dividends from the unit, as the German carmaker seeks cash to pay for billions of euros in costs to resolve an emissions-rigging scandal.
Scania, which didn’t pay dividends in 2013 and 2014, approved the payout on Dec. 18, Wolfsburg-based Volkswagen said Monday in an e-mailed response to questions. “The amount of the dividend also reflects the great success of Scania,” it said.
The move follows Volkswagen’s buyout of the final investors in Scania last year. Accessing funds from divisions unrelated to Volkswagen’s diesel-engine emissions scandal underscores the urgency of raising funds as Europe’s largest automaker faces fines, lawsuits and the cost of fixing about 11 million manipulated cars worldwide.
The company set aside 6.7 billion euros ($7.3 billion) in the third quarter and has acknowledged this won’t be enough. While a resolution in Europe is shaping up to be cheaper than feared, costs in the U.S., including regulatory penalties, could theoretically reach as much as $46 billion, according to Bloomberg Intelligence analyst Kevin Tynan.
“The group states the dividend is in line with its profit-distribution policy, but we view it as a fairly aggressive payment,” Per Karlsson, an analyst at credit-reporting company Standard & Poor’s, said in a report last month. “We also believe the funding of the dividend increases uncertainties about Scania’s future debt level, which is likely to be influenced by its parent’s financial situation.”
Scania previously had about 16 billion kronor in retained earnings that can be distributed. VW gained full control of Soedertaelje-based Scania in 2014 and de-listed the maker of heavy trucks and buses despite resistance from minority shareholders in Sweden.