Volkswagen shares soared Wednesday after the German vehicle giant revealed that its first-half earnings before charges related to its diesel-emissions scandal were “significantly higher” than market forecasts. That implies a second-quarter operating profit of EUR4.4 billion, the company’s best ever quarterly performance and an increase of about 20% from a year ago.
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Including the one-off items, however, VW said its operating profit dropped 22 percent to 5.3 billion euros.
Volkswagen announced that it plans to manufacture electric vehicles in North America by 2020. Volkswagen spokeswoman Jeannine Ginivan criticized the states’ decision to file suits and said the company already had agreed to spend billions of dollars to address all environmental harm from the excess emissions.
Arndt Ellinghorst, an automotive analyst at Evercore ISI, who has been bullish on Volkswagen for several months, attributed the improvement to better pricing, cost-cutting and a recovery of Volkswagen’s crucial business with corporate fleet customers. “The VW brand margin improvement is a clear indication that things are improving faster than many expected”.
The company provided no further details about its earnings in the first half of the year, citing the scheduled publication of results on July 28.
The news came after the company recorded charges of €16.2bn in 2015 to cover costs related to the scandal.
Volkswagen Group says it has set aside another EUR2.2bn in the first six months of the year in relation to costs arising from its “dieselgate” emissions scandal. Mr. Ellinghorst predicted that Volkswagen’s namesake brand pretax profit margin would slip to 1.6% from 2% past year.
New York’s Attorney-General called the use of “defeat devices” a “widespread conspiracy” and a “cunningly cynical fraud”.
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The company expects 2016 sales revenue to decline by up to 5% from 2015, and an operating return on sales of 5- 6%. May sales gains were even stronger, a sign that the automaker is starting to put the diesel scandal behind it. Its U.S. sales have been down 7% in the first half of the year, although the United States accounts for only about 5% of its global sales.
