Stronger sales, weaker euro good news for VW
Volkswagen, Europe's biggest automaker, benefited from strong sales and favourable exchange rates as it posted Thursday a second quarter profit more than four times the previous year's figure.
VW's net profit of 1.25 billion euros (1.6 billion dollars) towered over the 283 million euros earned in the second quarter of 2009 and easily beat analyst forecasts for 733 million euros compiled by Dow Jones Newswires.
The results sent VW shares soaring on the Frankfurt stock exchange.
Although weak earnings in the second quarter of 2009 helped the comparison, those in the period from April to June were also more than double that of the first three months of this year.
Second-quarter sales jumped by an annualised 21.9 percent to 33.16 billion euros, while operating profit in the three months came to almost two billion euros, helped by a weak euro which boosts exports.
This favourable foreign exchange effect was worth 400 million euros over the first six months of the year and should continue in the second half, finance director Hans Dieter Poetsch told a press briefing.
VW is "heavily hedged" against swings in the euro's value against major currencies like the dollar for the next two years, he added.
VW maintained its full-year sales target, that of surpassing the record 6.3 million vehicles sold last year, and its operating profit target of more than 1.9 billion euros, a level it has already exceeded.
The group -- which aims to become the world's leading automaker by 2018 -- warned however that second-half sales would not be as strong as those in the first six months of the year.
Several automakers, including French group PSA and Nissan of Japan, have also posted strong second quarter results as markets in Europe and the United States recover and growth continues in China, the world's biggest car market.
VW's second quarter sales of 1.86 million vehicles put it neck-and-neck with Toyota, currently number one worldwide, which sold 1.9 million according to the Japanese economic daily Nikkei.
For the six months to June, VW's operating profit climbed to 2.8 billion euros from 1.2 billion euros in first half 2009 as sales gained 20.7 percent to 61.8 billion euros.
A breakdown of the first half showed that VW's luxury brand Audi is still its main breadwinner, with operating profit of 1.3 billion euros.
The VW brand contributed 1.02 billion euros, with heavy truck maker Scania on 577 million euros and lower-priced Skoda providing 227 million euros.
Losses were reported by the Spanish brand SEAT, with 157 million euros, and the limousine maker Bentley, at 109 million euros.
The operating profit and loss numbers do not take Chinese earnings into account, even though it is now VW's main market, because like western rivals, VW operates there via partnerships with Chinese companies.
The Chinese operations alone earned a profit of 804 million euros in the first half of the year, a gain of 173 percent, VW said.
Demand in China was still strong even though the economy appears to be cooling a bit and "profit development is quite convincing" there, Poetsch said.
"I don't see any systematic reason that this would disappear in the future," he said, though second-half growth rates were not expected to match those of the first six months.
Shares in the automaker shot up 2.99 percent to 80.94 euros in afternoon trading on the Frankfurt stock exchange which was 0.58 percent higher overall.
"First-half earnings were clearly in excess of our expectations," chairman Martin Winterkorn was quoted as saying.
© 2010 AFP