Volkswagen AG, the world’s second-largest carmaker, reported first-quarter profit that beat analysts’ estimates on higher earnings at the Audi luxury brand.
Operating profit rose 10 percent to 3.21 billion euros ($4.26 billion) from 2.91 billion euros a year earlier, the Wolfsburg, Germany-based company said today. The figure beat the 2.66 billion-euro average estimate of nine analysts surveyed by Bloomberg. Sales gained 26 percent to 47.3 billion euros. The shares rose the most in six months.
Volkswagen is thriving even amid Europe’s debt crisis and is taking market share from rivals with a model lineup that runs from the Up! subcompact to Lamborghini sports cars and 50-ton trucks. The VW group, whose brands also include Skoda and Seat, increased first-quarter deliveries 9.6 percent to 2.16 million vehicles. The gains compare with revenue declines at PSA Peugeot Citroen and Renault SA and steeper European losses at Fiat SpA.
“It’s a very strong beat and flies in the face of the bearish mass-market view,” said David Arnold, a sales specialist at Credit Suisse Group AG in London. “VW just keeps printing money.”
VW rose as much as 11.75 euros, or 9.3 percent, to 137.95 euros, the biggest intraday gain since Oct. 27, and was up 8.3 percent as of 4:36 p.m. in Frankfurt. The shares have increased 18 percent in 2012, valuing the carmaker at 59.8 billion euros.
Audi, MAN Boost
Profit at Audi, which passed Daimler AG’s Mercedes-Benz to become the world’s second-largest luxury brand last year, surged 27 percent to 1.4 billion euros in the period, boosted by demand for top-of-the-line A6 and A8 sedans. VW earnings also gained following the inclusion of 223 million euros in profit from German truckmaker MAN SE, which VW now controls.
Volkswagen stuck to its target of matching last year’s record operating profit of 11.3 billion euros as higher revenue and auto deliveries offset increased development spending.
“The outlook seems conservative after the first quarter, which should have been the toughest this year,” said Juergen Pieper, a Bankhaus Metzler analyst in Frankfurt. “The results are very strong.”
The typical rise in second-quarter earnings may be tempered by spending to roll out technology that will underpin a new generation of the Golf hatchback and other models, Chief Financial Officer Hans Dieter Poetsch said on a conference call. Still, the quarter will likely be “not bad,” he said.
The German automaker warned last week that the debt crisis in Europe heightens risks for the auto industry this year. Demand in the region dropped 7.3 percent in the first quarter, while industrywide deliveries in China slipped 1.3 percent, increasing stockpiles of unsold vehicles in the world’s biggest car market. Volkswagen has so far been resistant to the woes in its biggest markets.
Earnings from VW’s Chinese joint ventures, which aren’t included in group operating results, jumped 52 percent to 848 million euros. The company expects a dividend payout of about 1.5 billion euros from the ventures this year, Poetsch said today. In Europe, VW deliveries edged up 0.5 percent, boosting its market share to 23.7 percent from 21.9 percent.
Other European automakers have felt the brunt of the local slump. Fiat SpA today reported that losses in Europe, Middle East and Africa nearly doubled to 270 million euros, eating into profit from its Chrysler unit.
Peugeot, Europe’s second-biggest carmaker, posted a 7.3 percent decline in first-quarter revenue and affirmed its projection that the region’s auto market will fall 5 percent this year. Renault reported a 9 percent drop in sales.
Uncertainty over market developments hasn’t stopped VW from expanding as it seeks to overtake General Motors Co. as the world’s largest carmaker. Last week, Audi agreed to acquire Italian motorcycle maker Ducati. VW also announced plans last week to build a new plant in western China as it seeks growth beyond the country’s bustling coast and signed off on a new Audi factory in Mexico, the brand’s first in North America.
Some other VW expansion efforts are incomplete. The manufacturer continues to examine alternatives to accelerate the integration of Porsche SE’s car-making operations after a merger with the holding company failed, CFO Poetsch said today. It is currently “not judgeable” whether such an alternative would be feasible, he said.
Even with delays caused by legal tangles, the combination with the maker of the 911 sports car will be finalized, Martin Winterkorn, the chief executive officer of VW and Porsche, said last week.
After raising its stake in MAN to 73 percent earlier this month, VW is continuing to pursue a combination with the Munich-based truckmaker, Scania AB, which the car manufacturer also controls, and its own commercial-vehicle operations. Among the options is a domination agreement of MAN, if VW accumulates a holding of more than 75 percent, Chief Financial Officer Hans Dieter Poetsch said last week.