VW profits surge amid drive into emerging markets

VW profits surge amid drive into emerging markets
Photo: DPA
Volkswagen, the biggest European carmaker, reported a profits leap on Wednesday, taking the stock market by surprise.

The group posted a 31-percent gain in first-half net profit on strong sales in emerging markets, pushing its share price above 200 euros for the first time.

“This shows that we are on the right path,” a statement quoted VW chairman Martin Winterkorn as saying.

VW’s net profit jumped to €2.572 billion ($4.0 billion) on a 3.0-percent rise in sales to €56.5 billion. The group stood by its 2008 growth targets for both sales and operating


In the second quarter, VW’s net profit surged to €1.643 billion euros, a gain of 35 percent from the same period a year earlier. Second quarter sales gained 4.5 percent to €29.5 billion euros, with both figures exceeding analysts forecasts.

“Volkswagen’s successful model rollout, leaner processes and disciplined cost management are enabling us to grow profitably,” said financial director Hans Dieter Pötsch.

Most of the company’s brands are to launch new models this year, and a VW statement said the group expected deliveries to surpass records set in 2007.

“The Asia-Pacific, Central and Eastern Europe and South America regions will record the highest growth in demand for group vehicles,” it said.

Volkswagen owns the VW, Audi, Seat, Skoda, Lamborghini, Bugatti auto brands and also Volkswagen Commercial Vehicles. VW also now holds 68.8 percent of the voting rights in the Swedish heavy truck maker Scania, the group said.

Scania would be consolidated into the parent group’s results in the second half and was expected to add a small contribution to overall profits. VW had already announced a new sales record in the first half of the year, at 3.27 million vehicles, owing to strong results in several emerging markets.

It sold more than a half million units in China for the first time, and has weathered problems facing the auto sector in general and rivals like Renault or Toyota in particular.

The operating environment was tougher “and is demanding considerable efforts from the automotive industry,” Winterkorn acknowledged.

VW shares jumped by 3.94 percent to €203.75 in midday trades on the Frankfurt stock exchange while the Dax index of leading shares was 1.08 percent higher overall. It was the first time in VW’s history that its shares traded for more than €200.