BackVolkswagen profit beats estimates on higher earnings at Porsche
The firm's first-half operating profit tumbled 32% to 1.01 billion while ebit fell to 3.33 billion from 3.44 billion a year earlier
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Frankfurt: Volkswagen AG, Europe’s largest auto maker, reported a less-than-expected drop in profit in the second quarter as gains at Audi and Porsche softened weaker profitability at its namesake brand.
Earnings before interest and taxes fell to €3.33 billion ($4.46 billion) from €3.44 billion a year earlier, the Wolfsburg, Germany-based manufacturer said in a statement on Thursday. The figure was higher than the €3.31 billion average of 13 analyst estimates compiled by Bloomberg. Revenue declined 2.2% to €51 billion.
“In light of the continued strong competitive pressures, the tense situation in some emerging economies and the fundamental technical and economic changes happening in our industry, we are working hard to create all the conditions we need today to ensure success tomorrow," chief executive officer Martin Winterkorn said in the statement.
After years of emphasizing sales growth in its goal of surpassing Toyota Motor Corp. as the world’s biggest car maker, Volkswagen is now shifting focus to profit margins. At the VW car brand, the group’s biggest unit, Winterkorn plans to cut costs and boost productivity by €5 billion by 2017.
The VW brand’s first-half operating profit tumbled 32% to €1.01 billion. The car maker is spending on the roll-out of a revamped version of the European edition of the Passat mid-sized sedan. Volkswagen also plans to invest $900 million to build a new seven-seat sport-utility vehicle in Tennessee to revive flagging US sales.
Apple-like development
VW shares advanced as much as 1.6% and were up 0.7% at €176.85 at 11:20am in Frankfurt trading. The stock has fallen 13% this year, valuing the company at €83.7 billion.
In addition to lowering purchasing expenses at the VW brand, the world’s No. 2 car maker is mobilizing a team of 40 to 60 top managers to accelerate vehicle and technology development to mimic the fast-paced roll-outs of consumer electronics companies like Apple Inc.
Volkswagen stuck to its forecast that operating profit will amount to 5.5% to 6.5% of sales, which may rise or fall by 3%.
Robust sales growth in China is keeping VW on track to exceed 10 million annual deliveries worldwide for the first time in 2014, four years earlier than initially anticipated. It plans to introduce 100 new or revamped vehicles through next year to put pressure on Toyota, which held a slim lead in the first half. Bloomberg
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