Volkswagen’s profit rose 3.4 per cent in the first quarter, the first time the auto maker hasn’t set aside billions of euros in provisions since admitting in September to rigging vehicles to pass emissions tests. First quarter operating profit contained overall positive special items of Euro 0.3 billion, due among other things to currency-related adjustments to the provisions recognized in connection with the diesel issue.
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The flagship Volkswagen brand barely broke even, but the company made profits at its luxury brands Audi and Porsche and the financial services branch.
Operating profit climbed to 3.44 billion euros ($3.83 billion) from 3.33 billion euros previous year, the Wolfsburg, Germany-based manufacturer said in a statement.
BERLIN – Volkswagen posted a surprise increase in first-quarter operating profit as the carmaker is pushing steps to overcome its diesel emissions scandal. The automotive division was sitting on 26 billion euros in net liquidity, up 5 billion from a year ago.
It has set aside 16.2 billion euros to cover vehicle refits and a settlement with U.S. authorities, but still faces potential U.S. Justice Department fines and questions over who was responsible for the cheating, with investigations ongoing. Quarterly group sales swung back to 0.8% growth after posting the first annual drop in more than a decade in 2015.
“We have succeeded in limiting the economic fallout from the diesel scandal and chalk up respectable results in very hard conditions”, he said.
Higher demand in western Europe and the Asia-Pacific also helped to offset declines in South America and eastern Europe.
Volkswagen saw profits tumble by almost a fifth at the start of 2016 as it continued to grapple with the fall-out from its global emissions scandal.
Quarterly sales in China, Volkswagen’s biggest market, rose 6.4 percent after falling in 2015.
That is, it expects group sales revenue to be down by up to five per cent on the year prior, depending on economic conditions and exchange rate developments, as well as “the backdrop of the diesel issue”.
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“2016 will be a transitional year for Volkswagen that will see us fundamentally realign the Group”. The Group’s robust financial strength and earnings power are key to our ability to take the necessary decisions calmly and diligently, and to resolve the strategic policies that will shape our future with the necessary determination.
