Volkswagen, Europe's biggest carmaker, said Friday that its net profit zoomed ahead by more the 40 percent last year on higher vehicle sales, but its chief executive nevertheless saw his salary cut.

VW said in a statement its net profit soared by 40.9 percent to a record 21.7 billion euros ($28.6 billion) in 2012 as revenues rose by 20.9 percent to 192.7 billion euros and deliveries to customers were up 12.2 percent at 9.276 million vehicles.

Underlying or operating profit rose by 2.1 percent to 11.51 billion euros.

The group said it would propose an increased dividend of 3.50 euros per share for 2012 compared with 3.00 euros per share a year earlier.

Looking ahead, VW said it expected to "outperform the market as a whole in a challenging environment" and deliveries to customers would increase year-on-year.

"However, we are not completely immune to the intense competition and the impact this has on business," it cautioned.

While 2013 sales revenues were expected to exceed the 2012 level, "given the ongoing uncertainty in the economic environment, our goal for operating profit is to match the prior-year level in 2013," VW said.

The group said in a separate statement that its supervisory board had decided to restructure management's pay so that board members would only receive a bonus only if group operating profit exceeded 5.0 billion euros.

In addition, the chief executive's bonus would be capped in 2012 and 2013 to a maximum of 6.75 million euros, while the other board members would see their bonuses capped to 2.5 million euros.

In all, the salaries of VW's board totalled 56 million euros last year, down from 70 million euros a year earlier.

And chief executive Martin Winterkorn's salary last year totalled 14.5 million euros in 2012, down from 17.5 million euros in 2011.

Despite VW's strong 2012 performance, analysts had been expecting an even stronger gain in profits last year.

As a result, VW shares were the biggest losers on the Frankfurt stock exchange in afternoon trading, plummeting 4.26 percent while the overall market was showing a gain of 0.81 percent.