Volkswagen AG on Wednesday reported its best ever quarterly profit, shrugging off the impact of the emissions-cheating scandal, even as it disclosed it would take EUR2.2 billion ($2.42 billion) in additional charges related to diesel litigation.
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That is up from last year’s 7 billion euro (£5.85 billion) and is largely due to improvements in the performance of the Volkswagen brand in the second quarter, especially compared with the weak first three months of the year.
Taking into account the special items of €2.2 billion relating to legal risks from North America, which were included in the first half results, operating profit will be €5.3 billion.
Volkswagen said on Wednesday its first-half operating profit beat expectations, helped by cost cutting at its core VW brand and rising European auto sales, but announced another €2.2 billion provision related to its emissions scandal. The company will release its entire first-half earnings statement on July 28.
The company on Tuesday became the target of yet another round of lawsuits over the bogus software it has admitted to inserting into almost 600,000 diesel vehicles in the United States – and 11 million worldwide – to cheat emissions standards.
The group said it expects sales revenue to be down as much as 5% compared to past year, as it factors in the impact of the emissions scandal and the current “economic conditions”, particularly in South America and Russian Federation.
The fallout from the emissions scandal also continues, with New York, Massachusetts and Maryland filing lawsuits seeking civil penalties.
Volkswagen last month agreed to pay up to US$10 billion for vehicle buybacks and loss compensation to consumers, US$2.7 billion in environmental mitigation, US$2 billion on clean-emissions infrastructure and US$603 million to most states in a sweeping settlement that must still be approved by a federal judge.
New York’s Attorney-General called the use of “defeat devices” a “widespread conspiracy” and a “cunningly cynical fraud”. And it said it expects full-year sales to decline by up to 5%.
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Still, revenue for the year is expected to fall by 5 per cent, VW said.
