Volkswagen Q1 profit boosted by emerging markets

Volkswagen Q1 profit boosted by emerging markets

Frankfurt: Volkswagen, Europe’s largest carmaker, expects to post higher revenue and earnings in 2011 after demand from emerging markets such as Russia and Argentina boosted its first-quarter results.

“We continue to see the most dynamic growth prospects in the emerging markets of Asia and Latin America, whereas the industrialised nations will continue to experience only moderate growth," Volkswagen said on Wednesday.

The company’s operating profit, which does not include earnings from its lucrative China business, surged to €2.91 billion ($4.26 billion) in the first quarter, surpassing the €2.19 billion estimated on average from a Reuters poll of 11 analysts.

“This looks really good ... above all, the operating profit. There have been concerns about the crisis in Japan dampening the company’s business but the company has been confident about it," Albrecht Denninghoff, an analyst at Silvia Quandt, said.

Shares in Volkswagen extended gains to trade 2.8% higher at €124.10 , outperforming a 1.8% gain by the STOXX Europe 600 Automobiles & Parts.

Volkswagen warned that debt problems of some countries, inflation and the impact of the crisis in Japan could hurt economic growth of many regions.

European carmakers have been grappling with difficulties in sourcing car parts from Japan since an earthquake and tsunami hit the country on 11 March 2011, though German carmakers have so far seen only a limited impact on their business.

France’s Renault on Tuesday predicted the impact of the Japan crisis on the auto industry supply chain could lead to slower production in the coming months.

Volkswagen sold 4.2% fewer cars in Japan in the first quarter than in the year-earlier period, but the Asian country accounts for less than 1% of cars the company sells.