VW Increases Profit Sixfold on China, Forecasts Slower Growth This Quarter
Volkswagen AG, Europe’s largest carmaker, said nine-month profit jumped more than sixfold, beating analysts’ estimates, and forecast growth in the current quarter will slow.
Net income was 4 billion euros ($5.6 billion), compared with 655 million euros a year earlier, Wolfsburg, Germany-based VW said today. Analysts predicted profit of 2.8 billion euros, the average of four estimates compiled by Bloomberg. Sales gained 20 percent to 92.5 billion euros. VW didn’t break out third-quarter figures.
Volkswagen fell as much as 3.2 percent from its intraday high in Frankfurt after the surprise release. The carmaker, whose profit is driven by the Audi luxury unit and emerging markets such as China, said the pace of growth in the first nine months won’t continue “as strongly” in the fourth quarter.
“They’re fairly cautious on the outlook,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler who recommends buying VW stock. “The results were extremely good and VW is well positioned and faces no concrete risks for a notable weakening of its business.”
Volkswagen’s preferred shares rose 2.98 euros, or 3.2 percent, to 96.76 euros at the 5:30 p.m. close of trading in Frankfurt. The shares have risen 48 percent this year, valuing the carmaker at 41.6 billion euros.
Nine-month sales at VW’s seven passenger-car brands, including Audi and Czech unit Skoda, rose 13 percent to a record 5.37 million vehicles. The numbers don’t include deliveries at Porsche SE, the sports-car manufacturer that is merging with VW.
China, western Europe, North and South America will “continue to drive demand” as VW presents new models such as the Audi A7 coupe, the VW Passat station wagon or Bentley’s new Continental GT coupe, VW said.
The German carmaker aims to reach its sales goal of 10 million vehicles by 2015, three years earlier than planned, as VW tries to pass Toyota Motor Corp. as the largest automaker, a person with direct knowledge of the matter said this week. More than 8 million deliveries are targeted by 2012, said the person, who asked not to be identified discussing internal goals.
“The successful business growth of the Volkswagen group in the first nine months of 2010 will not continue as strongly in the fourth quarter,” VW said in its statement. “Sales revenue and operating profit in 2010 will continue to perform positively.”
Nine-month operating profit more than tripled to 4.8 billion euros from 1.5 billion euros a year earlier, VW said.
The carmaker is targeting a second consecutive year of record global sales as it adds about 70 models, including upgraded versions of existing vehicles, across its brands. VW sold 6.29 million cars, sport-utility vehicles and light commercial vans in 2009, a gain of 1.1 percent.
VW increased nine-month sales of all brands in China by 39 percent to 1.48 million vehicles. Audi, already the largest luxury-car maker in the country, boosted deliveries 61 percent to 174,907.
The German company will add two factories in China as part of a 6 billion-euro plan to double production there to 3 million cars within four years. VW will also open a plant in Chattanooga, Tennessee, next year to supply the U.S. market and is expanding capacity in Russia.
Daimler AG, the world’s second-largest luxury-car maker, forecast today that it will sell 120,000 vehicles in China this year, up from a previous projection of 100,000. Chief Executive Officer Dieter Zetsche said in an interview that deliveries will increase by a “double-digit” percentage in 2011 and China is set to become the Mercedes-Benz unit’s biggest market by 2015.
Effects of exchange-rate fluctuations will have a “positive effect” on earnings in the current quarter, VW said as it plans to maintain its “disciplined” cost management.
To contact the editor responsible for this story: Kenneth Wong at firstname.lastname@example.org