Volkswagen has plunged into its first loss in more than 20 years as the embattled German carmaker began to count the costs of the exhaust emission crisis that has engulfed the group.
Europe's biggest carmaker reported on Friday a 1.58-billion-euro (1.78-billion-dollar) net loss for last year, after being forced to more than double its provisions to about 16.2 billion euros to help pay the bills for the emissions scandal. VW posted a 10.85-billion-euro profit in 2014.
"Volkswagen is in a very difficult situation," said Hans Dieter Poetsch, the chairman of VW’s 20-member supervisory board.
Based in the northern German city of Wolfsburg, VW admitted last September that it had cheated on diesel exhaust emissions tests for about 11 million vehicles around the world.
VW group chief executive Matthias Mueller declined at a press conference on Friday to provide a figure for the total cost of the scandal, citing ongoing negotiations with US justice authorities.
However, he said the 2015 loss would not have any ramifications for the group's workforce.
The 2015 loss is VW's first net loss since 1993 when it was forced to launch a four-day working week at the height of an economic downturn in Europe.
Meeting at its sprawling Wolfsburg headquarters, the VW board also decided to slash its dividend payment from a record 4.86 euros in 2014 to just 0.17 cents for last year.
In addition, the board decided to put on ice its planned interim report on the emissions exhaust scandal, which was due to be published at the end of this month.
VW said it still expects to bounce back into the black this year.
This is despite forecasting a 5-per-cent contraction in 2016 sales as a result of the slowdown underway in major emerging economies. Group sales in 2015 climbed 5.4 per cent to about 213 billion euros, the company said.
The group has already launched a cost-cutting programme at its core VW brand as it faces up to vehicle recalls, legal action and fines around the world, prompted by the revelations that it had equipped vehicles with software designed to manipulate emissions tests.
Friday's release of the group's key financial data from 2015 came after the company hammered out a settlement with US authorities to compensate US owners of diesel cars that were equipped with the software.
The deal requires VW to buy back or fix some 500,000 affected cars, plus pay substantial damages to consumers in the US.
VW's 2015 operating earnings, which reflects the performance of its core business activities, also slumped into the red, falling from a 12.7 billion euro profit in 2014 to a 4.1-billion-euro loss last year.
Without the massive costs of the emissions scandal, the group said it would have posted an operating profit.
Full details of the company's 2015 earnings are due to be released next Thursday.