Volkswagen operating profit surges in first quarter

 

Profits at German car giant Volkswagen (IOB: 0P6N.IL - news) surged in the first quarter of 2017, the group said Tuesday, even as the VW emissions cheating scandal drags on in the headlines.

Underlying or operating profit increased to 4.4 billion euros ($4.7 billion) from January to March, the firm said in a preliminary results release, up 28 percent over the same period last year.

"Improvements in the result of the Volkswagen brand," the biggest seller among the group's stable of 12 brands, were "in particular" behind the boost, VW said.

The statement pointed to succesful launches of new models like the Tiguan SUV and "a strong financial performance in the West European market," as well as "optimised fixed costs" as reasons for its success.

"Other brands within the group also contributed to the good performance," it went on.

As well as Wolfsburg-based VW, Europe's largest carmaker also owns manufacturers ranging from luxury Audi (IOB: 0FG8.IL - news) and Porsche to more affordable Skoda and Seat.

Across the whole group, VW expects to achieve operating return on sales of "between 6.0 percent and 7.0 percent" in 2017 -- or around double the 3.3-percent figure for last year.

Volkswagen sales have suffered in recent years, after it admitted in late 2015 to installing so-called "defeat devices" into 11 million diesel vehicles worldwide.

The software was designed to reduce emissions of harmful nitrogen oxides when engines were undergoing regulatory tests.

Most of the affected cars fall under the VW brand, but vehicles made by the group's Audi, Skoda and Seat brands were also among those carrying the software.

German prosecutors searched Audi offices last month as the hunt for those responsible for the scandal continues -- just one of the investigations in several countries seeking to establish who at the group knew of the cheating.

Meanwhile, a falling-out among historic majority Volkswagen shareholders the Porsche-Piech family over the scandal has played out in the media.

Former VW patriarch Ferdinand Piech agreed this month to sell most of his shares, after he accused his successor Martin Winterkorn of knowing about the emissions scheme earlier than he has admitted.

VW has so far set aside more than 22 billion euros ($23.5 billion) to cover fines and compensation related to the "dieselgate" affair, but experts estimate the final bill could be much higher.

The group plans to publish its full first quarter report on May 3.

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