Volkswagen has more than doubled its provisions for the diesel emissions scandal to €16.2bn (£12.6bn).
Last year it told shareholders that €6.7bn had been set aside for potential costs or recalls.
The huge charge pushed VW to a pre-tax loss of €1.3bn for 2015, compared with a profit of €14.7bn for the previous year.
The car maker expected group sales to fall by up to 5% in 2016.
Chief financial officer Frank Witter said clarifying the emissions “issue” would dominate the company’s agenda this year.
“We are again operating in an exceedingly challenging environment in which global demand for new vehicles is declining, exchange rates and interest rates remain highly volatile and competition in many of our markets is intensifying,” he said.
However, he was confident that the company would make “good progress on its chosen path”.
On Thursday, a US court disclosed details of a deal between VW and the US Department of Justice for more than 500,000 American owners of its diesel cars affected by the emissions cheating.
The deal will involve buybacks and “substantial” compensation for owners of mostly two-litre vehicles.
US district court Judge Charles Breyer said he expects an agreement between VW and regulators covering about 90,000 larger vehicles and SUVs to be addressed “expeditiously”. Final details of the packages offered will be announced in June.
Transport Secretary Patrick McLoughlin has asked Volkswagen why it was offering compensation to customers affected by the diesel emissions scandal in the US but not the UK.
A Downing Street spokeswoman said: “We expect VW to treat its UK customers fairly and to adequately address their concerns. The Transport Secretary has pressed VW on the specific issue of this discrepancy of compensation.”
Several German carmakers plan to recall more than 600,000 cars as part of the widening investigations into emissions, according to reports in Germany.
Government sources have said that Mercedes, Opel and Porsche as well as Volkswagen and Audi would recall some diesel vehicles.
Daimler shares fell 4.8% in Frankfurt on Friday after the carmaker said it had begun an internal investigation into its diesel emissions testing.
The owner of the Mercedes-Benz brand said it was conducting the probe at the request of the US Justice Department.