By Christoph Steitz and Tom Sims

FRANKFURT: (Reuters) –Volkswagen AG said that Russia’s invasion of Ukraine and its effect on supply chain could impact business. The company, Europe’s leading carmaker, added on Friday that 2021 operating profits had more than doubled despite lower vehicle deliveries.

Following an operating profit of 19.3 billion euro ($21.1 million), the company suggested that its annual dividend be increased by more than 50%, to 7.50 Euro per ordinary and 7.56 Euro per preferred share.

As Russia invades Ukraine, carmakers have to scramble for alternative suppliers of critical parts from Ukraine. This is because Russia has halted assembly lines and broken complex supply chains.

The Volkswagen (DE:) Group is concerned that recent developments in Ukraine could have an adverse impact on its business. According to the company, this may be caused by bottlenecks in supply chains.”

Volkswagen explained that 2021 saw a doubling of the operating profit due to increased prices and a better product mix. Volkswagen stated that it anticipates an operating profit margin of 7.0%-8.5% for 2022, as compared to 7.7% in 2021.

According to the company, “However this guidance is subjected to the further developments of the wars in Ukraine and in particular their impact on the group’s supply chains as well as the whole global economy,”

Russia calls its actions in Ukraine a “special operation.”

($1 = 0.9162 euro)