Chris Bryant is a Bloomberg Gadfly columnist covering industrial companies. He previously worked for the Financial Times.

Volkswagen is running just to stand still. The shares surged as much as 7.3 percent on Wednesday after the German automaker said first-half operating profit, excluding extraordinary items, was a better-than-anticipated 7.5 billion euros ($8.25 billion).

It's understandable that investors are happy that the extraordinary diesel-emissions scandal doesn't seem to have had a big impact on the company's operating performance. Group sales rose 0.8 percent in the first five months of the year, and the company said the core VW brand -- a perennial laggard -- had fared better.

Shares Spike
VW surged after the company said first-half profit will beat analyst estimates.
Source: Bloomberg
Intraday times are displayed in ET.

But the company can't afford to trip on any operational banana skins. VW's update included an additional 2.2 billion euros in one-time items, chiefly linked to new legal risks in North America. These should temper investor enthusiasm.

So far VW has set aside $18.2 billion for fines and costs linked to the diesel scandal -- but, as Gadfly has long argued, it's still impossible to know if that will be adequate.

Only a few weeks after VW attempted to draw a line under the affair with a $15.3 billion settlement with U.S. authorities, three U.S. state attorneys general on Tuesday announced they were suing the company for rigging diesel engines and covering up the behavior. Worse, they alleged a large number of VW employees, including new CEO Matthias Mueller, knew about the defeat devices.

VW's Decline
The stock has failed to recover to its level before the crisis
Source: Bloomberg

There is therefore a considerable, yet unquantifiable, risk that each additional cent in earnings that Volkswagen makes selling cars and cutting costs walks out the door again in fines. Little wonder the stock is still trading below its pre-crisis level.

VW is trying to accelerate with the handbrake on.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Chris Bryant in Frankfurt at

To contact the editor responsible for this story:
Edward Evans at