Volkswagen sales up, net jumps on options

AP News
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Posted: Oct 27, 2011 6:45 AM
Volkswagen sales up, net jumps on options

Volkswagen AG saw its net profit rise sharply in the third quarter to euro7.14 billion ($10 billion) boosted by a large accounting addition from revaluing options related to its stalled takeover of Porsche.

The company made euro2.20 billion in the same period a year ago.

Sales revenue rose 25.3 percent to euro38.512 billion, and operating earnings, which exclude the option issue, jumped by 45 percent to euro2.9 billion from the year-ago quarter, ahead of analyst estimates of euro2.5 billion.

With operating earnings of euro9 billion in the first nine months, the company said it had already exceeded 2010 full-year earnings with three months still to go in the year.

"Our strong business performance shows the strength and stability of our strategy", said CEO Martin Winterkorn. The company reaffirmed its earnings prediction for significantly higher sales and operating profit this year, and the company's shares rose 5.9 percent in morning trading to euro112.05 on a rising German stock market boosted by news of a deal to give financially troubled Greece more debt relief.

Volkswagen showed unit sales growth in Western Europe of 8 percent despite uncertainty from the ongoing government debt crisis, 29.7 percent growth in Central and Eastern Europe, and 14.6 percent in the Asia Pacific region including China.

Volkswagen's takeover of Porsche has been stalled by legal issues, although the companies already cooperate extensively. The company said it was revaluing put and call options related to the deal, which added euro6.8 billion to its results.

Potential liability from legal proceedings over alleged share manipulation by Porsche make it difficult to quantify the risk Volkswagen would be taking in a share exchange. The companies say they are committed to going through with the combination and are looking at other ways to accomplish that.