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Amidst Management Turmoil, VW Delivers Strong Earnings

German maker takes a sharp knife to costs.

by on Apr.29, 2015

VW scored a strong hit with the launch of its latest-generation Golf family.

While its boardroom may be racked with turmoil amidst the ouster of its long-time chairman, Volkswagen AG managed to salve investors’ concerns a bit with news that its first-quarter earnings rose 19%, to $3.23 billion.

The maker says it was able to cut costs “in the low triple-digit millions” during the January-to-March period, addressing a problem that had begun to worry analysts – and raise concerns within its boardroom. The maker also benefited from the nascent recovery of the European market which is just emerging from its worst downturn in decades.

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The numbers reported by the 12-brand Volkswagen Group came in ahead of what industry analysts had forecast and, with the maker forecasting continued growth ahead, it could bode well for the post-Piech era.

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VW Posts Solid Second Quarter Despite Net Profit Decline

Rival Peugeot slides deeper into a hole - yet investors cheer.

by on Jul.31, 2013

VW's net fell sharply - but that was largely due to its takeover of Porsche.

At first glance, it might have seemed a tough quarter for Volkswagen AG. After all, the maker’s net profit tumbled by half compared to year-ago levels. But the 2% jump in operating earnings is what analysts and investors are focusing on.

VW’s net was hammered largely by the anticipated, one-time costs associated with its takeover of German sports car manufacturer Porsche. The operating income, up 1.8% year-over-year, tells how the maker was able to hold its own in what it called a “difficult market environment.”

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In fact, an even clearer picture of that environment emerged from the earnings report posted by VW’s French rival PSA Peugeot Citroen which saw its losses climb to 426 million euros for the first half of the year due to declining European car sales and a strike by workers protesting its plans to close factories, reduce capacity and eliminate 8,000 jobs.

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VW Earnings Plunge 38% as Euro Market Collapses

Maker remains world’s third-best seller.

by on Apr.24, 2013

Despite the strong reviews for the new Golf, VW earnings were hit hard by problems in Europe.

The ongoing collapse of the European automotive market took a heavy toll on the world’s third-largest automaker by unit sales, Volkswagen AG reporting a 38% decline in first-quarter profits.

The maker previously had been able to offset the worst of the European downturn by counting on strong demand in other key markets, especially China. But the results of the first quarter shows it is being caught up in the same net that is expected to hammer earnings for essentially all manufacturers operating on the Continent – including Ford and Daimler, both of whom also reported earnings today.

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Europe’s biggest automaker said it earned 1.95 billion euros, or $3.15 billion, for the January-March quarter, down from 3.15 billion euros a year ago. Revenue, meanwhile fell 1.6 percent, to 46.57 billion, due to what VW called “negative effects from declining European markets.”

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VW Runs Up Big Score for 2012

$15 bil earnings handily top Toyota, GM.

by on Mar.22, 2013

The success of the latest Golf has helped fuel VW's industry-leading profitability.

After setting its sights on becoming the world’s biggest carmaker six years ago, Volkswagen AG has steadily moved closer to its twin objective of becoming the world’s most profitable automaker, reporting operating income of 11.5 billion euros, or $15 billion, for 2012. The total easily surpassed General Motors Co.’s $7.9 billion and Toyota Motor Corp.’s $11.1 billion.

Martin Winterkorn, chairman of VW’s Board of Management, noted during the company’s annual financial press conference the Volkswagen Group had mastered the challenges posed by a difficult market environment in 2012 by posting record vehicle sales, sales revenue and earnings.

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“Volkswagen is feeling the headwinds –especially in Europe. Nevertheless we remain guardedly confident,” he said.

The Volkswagen Group not only turned in a compelling operational performance in the past fiscal year – it also met its targets for major strategic projects: The once-uncertain acquisition of the Porsche brand was completed last August, while Ducati, a legendary motorcycle brand, also joined the Group family, Winterkorn said.

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Volkswagen Bucks Trend with 18% Earnings Gain

What European crisis?

by on Jul.26, 2012

Volkswagen gained ground despite the European recession and aims to continue its upward swing with new models like the Passat Alltrack.

A day after Ford Motor Co. saw earnings plunge 57%, largely due to problems in recession-wracked Europe, Germany’s Volkswagen AG posted an 18% jump in second-quarter profits.

The maker more than offset the problems back home with strong demand in other key markets such as China, Russia and India – and the U.S., where VW products like the Passat are selling at a pace the maker hasn’t seen since the heyday of the original Beetle four decades ago.

“We can be satisfied with our business performance in the first six months,” Volkswagen AG Chief Executive Martin Winterkorn said in a statement. “Our strong position on world markets will help us to exceed the development of the overall market despite the challenging environment.”

VWAG saw its net profit for the second quarter jump to €5.64 billion ($6.84 billion), up from €4.78 billion a year ago. Meanwhile, revenues climbed 19%, to €48.1 billion.

For the first six months of 2012, the maker’s earnings are up 36%, revenues climbing 23%, so the second quarter saw the maker’s momentum slow a bit even if it outperformed key competitors struggling to deal with the European crisis.

PSA Peugeot Citroen yesterday revealed it lost €819 million (or $990 million) during the first half of the year.  It has outlined an aggressive turnaround plan that includes closing an underutilized plant – but that could cause problems as the maker seeks a bailout from the French government.

Ford, meanwhile, reported an operating loss of $404 million on its European operations during the second quarter compared to a $176 million profit a year earlier.  And Ford is warning it expects to lose $1 billion in Europe for all of 2012. General Motors is expected to report an even more substantial loss on its flailing Opel subsidiary next week.

(For more on Ford’s earnings, Click Here.)

Daimler AG yesterday reported an 11% decline in second-quarter earnings, meanwhile, to  €1.51 billion ($1.83 billion), though it put the blame, as much as anything, on the cost of launching new models such as the A- and B-Class.  Daimler insisted the numbers were “good,” all things considered, and stuck to its full-year earnings target, but Chief Executive Dieter Zetsche warned “The risks will more likely increase in the second half rather than decrease.”

While Zetsche is far from the only one worrying about an increasingly uncertain global situation, Wolfsburg-based Volkswagen, if anything, predicted things could get even better for the company in the second half.

The maker has been outpacing rivals in the slowly reviving U.S. market and it remains in a tight race with arch-rival General Motors for leadership in the fast-growing Chinese market. At the same time it released its Q2 earnings, in fact, VW formally announced the opening of its latest Chinese assembly plant, a Polo factory in Yizheng.

But even there, analysts caution, the situation is tenuous.  For the past decade, China’s automotive market has been expanding at a high double-digit annual rate.  Whether it will even reach 10% this year is under debate and the first quarter actually saw a modest slide.

VW officials did acknowledge the likelihood the European market would continue to decline. The company’s deliveries in Western Europe outside the home German market fell by 5.7% during the first half of the year.

But the maker has reason to crow.  Even its weakest brand, Spanish-based Seat, managed to increase deliveries, and its Audi brand, in particular, is breathing down the necks of traditionally stronger luxury makers Mercedes-Benz and BMW.

Meanwhile, the second-quarter net earnings outpaced analysts’ estimates of €2.79 billion compiled by FactSet.

(Despite strong sales, VW likely to dip to third in global sales race for 2012. Click Herefor that story.)

Nonetheless, operating earnings actually missed their anticipated target and analysts warned that VW faces increased costs, in the near-term, as it presses forward with plans to develop a new “architecture” for its small and midsize vehicles that along could cost it €16 billion through 2016.  All told, the group plans to invest  €62 billion during that period on products and plants.  That may explain why nervous European investors responded warily after the VW announcement, initially driving down the maker’s stock by more than 3%.

VW Net Down Sharply but German Maker Targets Big Increase in 2012 Sales

Cost controls called critical as European market tumbles.

by on Mar.12, 2012

VW is betting it can beat last year's sales record with new products like the Audi A3.

Despite a sharp drop in its fourth-quarter earnings and the worsening situation in its European home market, Volkswagen AG today predicted it will see a substantial rise in sales and revenues for 2012 as it brings an array of new products to market.

But cost management will be critical because the maker admitted it is facing “increasingly stiff competition in a challenging market environment, especially in certain European countries.”

Buried amidst the maker’s overall financial data was word that VW would nearly double the pay for its various board members, to $93 million.

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The German giant – which surged to second in global automotive unit sales last year, behind General Motors and ahead of Toyota – revealed that net earnings for the October – December quarter fell by nearly a third, to 2.16 billion Euros, or $2.8 billion, down from 3.2 million Euros the year before.

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VW Hits Earnings Home Run; Daimler Profits Slip

Volkswagen confirms it is on track to be global #1.

by on Oct.27, 2011

The real battle for world dominance will be in China where VW is firmly entrenched.

Volkswagen delivered a huge third quarter, while rival Daimler had its problems.

Confirming it is on track to become the global sales leader Volkswagen revealed it had also hit one out of the park, tripling its net profit for the third quarter of 2011.

Things didn’t go so well for VW’s German rival during the July – September quarter, however, Daimler AG announcing a 15% earnings decline – even though senior officials insisted the company is still on track to deliver better numbers for all of 2011.

Volkswagen’s big increase accompanied a sharp jump in worldwide sales, which reached 6.2 million vehicles during the first nine months of this year.  With VW expected to top sales of 8 million for the full year, industry analysts have predicted the carmaker will outsell rivals General Motors and Toyota – which had led the industry for the last few years but has been hurt by production cuts resulting from the Japanese earthquake of March 11.

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For his part, VW Chief Executive Martin Winterkorn admitted his goal of world automotive domination, though not necessarily this year, telling investors, “We are on the right path to becoming the world’s leading automaker by 2018 — in both economic and ecological terms.”

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Hyundai, VW Latest to Report Big Earnings Gains

But both makers issue warnings about the future.

by on Jul.28, 2011

Products like the new Golf helped Volkswagen more than triple second-quarter earnings.

Despite the slow global recovery, a weak U.S. economy, rising raw materials costs and other “headwinds,” automakers around the globe have been delivering some solid earnings for the year’s second quarter – though not always enough to keep investors happy.

That’s what Volkswagen found out today as it reported a tripling of its second-quarter earnings, only to have investors sell off its stock due to concerns about the challenges the company faces in the months ahead.

The market gave a warmer response, however, to Hyundai Motor, the Korean carmaker beating analysts’ forecasts with a 37% rise in quarterly profits driven by record vehicle sales and, in particular, gains in the critical U.S. market.  But Hyundai also had some warnings for analysts and investors.

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Hyundai appears to have done the best job of making gains at the expense of its Japanese rivals – who were hammered by a March 11 earthquake and tsunami that nearly shut that country’s auto industry down.  But Hyundai is also riding a wave of new products, from the subcompact Accent to the big Equus, which has proven a bigger success than even company executives had forecast.

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