Volkswagen screeches ahead in first quarter

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Europe's top automaker Volkswagen reported runaway first-quarter results on Wednesday, with net profit almost doubling and sales soaring by close to a fifth, echoing strong results from competitors.

"We started 2010 with a large number of attractive new vehicles and pressed ahead with our model offensive," the German giant's chief executive Martin Winterkorn said in a statement.

"The good start to the current year shows that we are on the right path and that we were able to benefit disproportionately from the growth in the global auto market in the first quarter," he said.

Volkswagen, which aims to overtake Japan's troubled Toyota as the world number one by 2018, said net profit rose to 473 million euros (633 million dollars) from 243 million euros in the year-earlier period.

Operating profit was 848 million euros, up from 312 million euros in the first quarter of 2009.

Sales soared 19.4 percent to 28.6 billion euros. Pre-tax income was 703 million euros, compared to just 52 million euros. The results were better than expected, Merck Finck analyst Robert Heberger said.

Volkswagen's global vehicle sales in the first quarter soared 24 percent year-on-year as the company continues to benefit from its large presence in the dynamic Chinese and Brazilian markets.

The results follow solid first-quarter results from other European automakers this week, with Italy's Fiat saying on Wednesday that sales rose 14.7 percent to 12.9 billion euros.

France's PSA Peugeot Citroen said Wednesday that its sales were up 27.5 percent at 14 billion euros, raising its operating profit outlook.

VW's domestic rival Daimler, owner of the Mercedes brand, on Monday raised is 2010 profit targets after returned to profit in the first quarter with operating earnings of 1.2 billion euros on sales of 21.2 billion euros.

Wolfsburg-based VW, which managed to stay in the black last year despite the global downturn, said it still expected to report higher deliveries to customers this year, as well as increased sales and operating profit.

Interest rate and exchange rate volatility would remain a drag on income, however, it warned.

The firm's brands range from super-luxury Bentley and premium brand Audi to Skoda and Seat.

Last month, Winterkorn said he was upbeat on the automaker's growth potential in the United States and China in 2010, but he expects "strong headwinds" in Europe and the company's home market of Germany in particular.

Due to its extensive line-up of small cars, Volkswagen was one of the biggest beneficiaries of state-backed "cash for clunkers" scrapping incentives, which were launched last year in many major markets to revive demand.

The company therefore has a large exposure to the anticipated decline as most of the initiatives expire.

-- Dow Jones Newswires contributed to this report --

© 2010 AFP

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