Volkswagen Q2 earns jump 18 percent

AP News
Posted: Jul 26, 2012 6:17 AM
Volkswagen Q2 earns jump 18 percent

FRANKFURT, Germany (AP) — Stronger demand from North America and the world's developing markets helped German automaker Volkswagen record an 18 percent jump in second-quarter earnings.

Net profit for the April-June period increased to €5.64 billion ($6.84 billion) from €4.78 billion a year ago. Revenues increased 19 percent to €48.1 billion.

The Wolfsburg-based manufacturer said that worldwide demand for cars increased in the second quarter in the US, China, Russia and India, and would rise again in the second half of the year — but at a slower pace.

Volkswagen warned the car market would shrink in western Europe, where economies are slowing due to spending cutbacks and consumer worries due to a crisis over too much government debt.

The company also reported an earnings increase of 36 percent for the first six months, while revenues rose 23 percent to €95.3 billion.

"We can be satisfied with our business performance in the first six months," CEO 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."

Volkswagen has outperformed other European mass-market carmakers, who are struggling with weak pricing and markets depressed by slow growth and high unemployment in countries such as Spain and Italy. It enjoys a strong business in China and reaps higher margins from its Audi luxury brand.

The net profit figure easily beat analyst estimates compiled by FactSet of €2.79 billion. Operating earnings, however, increased by a smaller 3.4 percent to €3.28 billion and fell short of expectations for €3.29. Operating earnings exclude financial items such as interest and taxes and are sometimes considered to show a clearer picture of how a company's basic business is developing.

Slower increases in operating earnings and the caution regarding Europe helped weigh on shares, which fell 3.6 percent to €124.20 in midday trading in Europe.