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VW Delivers Profitable Surprise

Earnings “significantly higher” despite diesel scandal.

by on Jul.20, 2016

Regaining momentum: VW delivers a strong, first-half profit despite the costs of its diesel scandal.

Volkswagen AG beat its earnings forecast for the first half of 2016, delivering “significantly higher” profits even while setting aside another 2.2 billion euros, or $2.4 billion, to cover the growing cost of its diesel emissions scandal.

The news comes a day after New York and two other states filed suit against the embattled German maker, claiming senior executives had helped cover up the diesel emissions subterfuge. Last month, VW agreed to a $14.7 billion settlement covering its 2.0-liter diesel, a deal that includes $10 billion to buy back nearly 500,000 vehicles.  Most of the funds VW has so far committed to settle what it calls the “diesel issue” came out of 2015 earnings, however.

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For the first half of 2016, VW said it had an operating profit of 7.5 billion euros, or $8.25 billion. That would drop to 5.3 billion euros after factoring in the latest charges for the emissions scandal, money largely related to legal costs in North America.


VW Back in the Black but Diesel Scandal Takes a Stiff Toll

Profits down 20% year-over-year.

by on May.31, 2016

VW gets back into the black for Q1, but the maker see lower sales and smaller margins for all of 2016.

Volkswagen AG clawed its way back into the black during the first quarter of this year following the spectacular plunge it took last year as it dealt with a global diesel emissions scandal.

Even so, the maker’s $2.6 billion profit for the January-March quarter was down 20.1% from year earlier numbers. Excluding one-time items, VW’s operating profit was down 5.9%, to $3.5 billion. Sales and other revenues, meanwhile, slipped 3.4%, to $56.8 billion.

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“In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016,” VW CEO Matthias Mueller said in a statement.


VW Investing $114 Bil in Bid for Global Sales Leadership

New products to get majority of investment.

by on Nov.22, 2013

The new investment program will see the CrossBlue concept put into production.

With a goal of becoming the world’s largest automaker in mind, Volkswagen AG plans to invest $114 billion to upgrade factories and roll out an array of new vehicles for its more than a dozen different brands.

The maker, currently third in global sales behind Japan’s Toyota Motor Co. and Detroit-based General Motors, has set a goal of being the world’s “leading” automaker by 2018, the period covered by the latest plan – which calls for an investment of 84.2 billion euros. At the same time, the maker hopes to reduce spending on property, plants and equipment by 500 million euros annually.

“We will continue to invest strongly in our innovation and technology leadership,” Chief Executive Officer Martin Winterkorn said in the statement. “This will give us extra power on our way to the top.”

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Over two-thirds of the planned investment will go into product, according to Volkswagen, perhaps no surprise considering the wide range of brands the maker has added over the years. VW’s Automotive Group now covers everything from small and economy vehicles, with the Seat and Skoda lines, to luxury and ultra-premium models, with Audi, Lamborghini and Bentley.  Since Winterkorn  took the helm in 2007, it has added Scania and MAN trucks, the Ducati motorcycle company – and completed a challenging takeover of sports car maker Porsche.


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.


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.”


Booming Sales Put Volkswagen of America Back in the Black

First profit in over a decade.

by on Mar.29, 2013

Workers at the new VW plant in Tennessee have had trouble meeting the growing demand for the American-made Passat.

For the first time since the original Beetle dominated the American import market, Volkswagen of America is moving solidly back into the black.

The German maker’s U.S. sales and marketing arm had steadily lost sales, share – and lots of money – ever since Asian rivals like Toyota and Honda became dominant forces in the market back in the late 1970s. In fact, VW’s decline was so severe that the maker came close to abandoning the U.S. in the early 1990s.

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But, over the last several years, it has picked up significant momentum with a mix of new products, aggressive marketing – and the addition of its first U.S. factory in decades, in Chattanooga, Tennessee.


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.


VW Earnings Surge 41% as Sales Hit New Peak

But 2013 forecast gloomy as European market staggers.

by on Feb.22, 2013

Bigger profit, smaller paycheck for VW CEO Winterkorn.

What should have been an especially good bit of news for Volkswagen was tempered by the maker’s less-than-upbeat outlook for the European market this coming year.

The German maker, which was the world’s third-largest automotive manufacturer in 2012, saw a 40.9% surge in its 2012 net profit, with revenues jumping 20.9% for the year. Volkswagen AG said its operating profit increased by 2.1% for the year.

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The maker said it expects to “outperform the market as a whole in a challenging environment” during 2013, with a further increase in sales anticipated. But the statement by CEO Martin Winterkorn added a cautionary note that, “We are not completely immune to the intense competition and the impact this has on the business.”


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%.

European Crisis Fails to Slow VW Earnings Growth

“A very good start,” as profits exceed optimistic forecasts.

by on Apr.26, 2012

VW plans to introduce as many as 40 new models across its various brands this year. The Golf R is shown here.

The European economy may be teetering towards disaster but it was full steam ahead for Volkswagen AG, the German automaker handily exceeding analysts’ already optimistic expectations with a first-quarter profit of $4.2 billion.

The 87% jump reflected VW’s steady sales gains around the world, especially in the United States, along with China, Russia and other emerging markets.

“With the first quarter we have had a clearly good start to the year,” said Volkswagen Chief Executive Martin Winterkorn in a prepared statement.

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In Euros, VW’s net profit rose to 3.17 billion, with pretax profits up 93%, to 4.3 billion Euros.  Revenues jumped to 47.3 billion Euros, a 26% gain driven by an 11% increase in worldwide vehicle deliveries. The maker sold 2.21 million vehicles during the quarter, which could put it in a position – if it continues that trend – to take on U.S. rival General Motors for the global automotive sales lead this year.