VW profit up four-fold, beats targets

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Volkswagen, Europe's biggest automaker, posted Thursday a second quarter net profit of 1.25 billion euros (1.6 billion dollars), well above forecasts and more than four times the previous year's figure.

Financial analysts had expected earnings of 733 million euros, with the results sending VW shares soaring in midday trade on the Frankfurt stock exchange.

Although the second quarter of 2009 was quite weak, which helped the comparison, earnings in the April to June period were also more than double that of the first three months of this year.

A jump in deliveries saw second-quarter sales jump by an annualised 21.9 percent to 33.16 billion euros, while operating profit in the three months came to almost two billion euros, VW said.

VW maintained its full-year sales target, that of surpassing the 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 in a statement 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 in first half 2009 as sales gained 20.7 percent to 61.8 billion euros.

A breakdown of the first-half data showed that VW's luxury brand Audi is still its main breadwinner, with an 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 automaker 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 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.

Shares in the automaker shot up 3.91 percent to 81.66 euros in midday trading on the Frankfurt stock exchange which was 0.62 percent higher overall.

"First-half earnings were clearly in excess of our expectations," chairman Martin Winterkorn was quoted as saying.

© 2010 AFP

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