VW profit leaps ahead but slowdown in sight

27th October 2010, Comments 0 comments

Volkswagen, the biggest European automaker, said Wednesday that its third-quarter net profit leapt more than 10-fold while warning of a slowdown in the final three months of the year.

The group reported a profit of 2.2 billion euros (3.0 billion dollars) owing to strong demand and strict cost controls, but did not raise its full-year outlook even though the targets are considered prudent by many analysts.

"Increased demand for our group models and our disciplined cost management led to these strong results, which have strengthened our sound financial base," a statement quoted VW finance director Hans Dieter Poetsch as saying.

The results meant VW was among the leaders of global automakers that have published quarterly results.

That was reflected in its share price, which has gained around 59 percent this year, the best performance by a German blue-chip stock, though they gave up some ground on Wednesday.

After reporting nine-month results on Friday, VW said third-quarter sales jumped by 18.4 percent to 30.7 billion euros, and operating profit climbed to 1.985 billion euros from 278 million in the third quarter of 2009.

That period marked the low point in the recent global auto sector crisis.

Looking ahead, VW warned the sharp rebound would ease, saying that growth "in the first nine months of 2010 will not continue as strongly in the fourth quarter."

VW maintained its full-year targets rather than raising them as many analysts had expected.

VW and its nine brands that include Audi, Bentley, Seat and Skoda, still expect to surpass last year's unit sales of 6.3 million vehicles and operating profit of 1.9 billion euros.

The group sold 5.4 million vehicles in the first nine months of this year, and its operating profit since January already stands at 4.8 billion euros.

Meanwhile, VW chairman Martin Winterkorn was quoted as saying that "the Volkswagen Group continues to have its sights firmly set on capturing pole position in the automotive industry."

VW wants to overtake Toyota as the world's biggest automaker by 2018.

Financially it is in a good position at the moment, with net cash of 19.6 billion euros as of September 30.

VW has already bought 20 percent of the Japanese maker Suzuki, is in the process of taking over Porsche, wants to create a heavy truck division with its Scania brand and rival MAN, and is looking at the Italian maker Alfa Romeo.

Much of VW's success is a result of its strong presence in China, now the German group's primary market.

In the first nine months of the year, VW earned 1.3 billion euros in China, compared with 500 million euros in the same period a year earlier.

A breakdown of sales by brands showed Audi still leading the pack, with an operating profit of 2.27 billion euros from January to end September.

Bentley and Seat, on the other hand, continued to post losses.

Shares in VW showed a loss of 0.38 percent to 104.25 euros in midday trading on the Frankfurt stock exchange, while the DAX index of leading stocks was 0.13 percent higher overall.

© 2010 AFP

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