Volkswagen targets better year after weak start

8th March 2005, Comments 0 comments

8 March 2005, WOLFSBURG - Automotive giant Volkswagen predicted on Tuesday a difficult year in key markets including Germany, the United States and China but said it expected operating profit to improve over 2004. Europe's largest car maker, which saw post-tax profit plunge 28.6 percent in 2004, said operating profit for the first quarter of 2005 "will not be satisfactory" after a weak start to the year. But the car maker predicted an improvement in the course of the year when new high-volume models become

8 March 2005

WOLFSBURG - Automotive giant Volkswagen predicted on Tuesday a difficult year in key markets including Germany, the United States and China but said it expected operating profit to improve over 2004.

Europe's largest car maker, which saw post-tax profit plunge 28.6 percent in 2004, said operating profit for the first quarter of 2005 "will not be satisfactory" after a weak start to the year.

But the car maker predicted an improvement in the course of the year when new high-volume models become available from the second quarter and second half of 2005.

"Operating profit after special items will improve year-on-year in 2005 - although the extent of this improvement depends on external factors that cannot be predicted at present," a statement said on release of the annual report for 2004.

Volkswagen shares fell 2.76 percent to EUR 36.31 on the Frankfurt exchange, with traders saying the VW group's outlook was weak and vague.

Volkswagen said it "assumes that the situation will remain difficult" in key automotive markets in 2005. VW sales in the United States had fallen 15 percent and those in China by some 6 percent last year.

"In the face of growing price pressure, continuing unfavourable exchange rates and uncertainty about raw material price developments, the competitive situation in the industry will remain tense," it said.

In the first two months of the year, VW's worldwide deliveries were down 0.5 percent over the same period in 2004, with deliveries in China falling by 33,000 units year-on-year.

However the company said that with the launch of new products this year it "assumes it will increase worldwide deliveries to customers in 2005".

On the whole Volkswagen "held its own in a difficult 2004", the statement said. Operating profit of more than EUR 2 billion before special items exceeded the forecast of EUR 1.9 billion.

Pre-tax profits of just under EUR 1.1 billion were down by 18.8 percent from 2003. The earnings drop came on sales revenues of EUR 88.96 billion, up 4.9 percent.

VW said the automotive division's net cash flow was in the black by some EUR 1.9 billion, compared with a red-ink cash flow of EUR 2.49 billion in 2003.

The new model initiative was successful and the group exceeded its target of more than 5 million deliveries to customers, it said.

DPA

Subject: German news 

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