Volkswagen third-quarter net profit tripled from last year because of increased sales and cost-cutting that has its German labour force working more hours for less pay, The Associated Press (AP) reported.

The car maker reportedly earned EUR273m (US$327.38m), or EUR0.71 a share, in the July-September period, compared with EUR67m, or EUR0.18 a share, in the year-ago period.

Analysts had expected EUR286m, AP noted.

The report said VW's revenue rose 13% to EUR23.9bn compared with EUR21.2bn in the same period last year.

"The development of the Volkswagen Group in the third quarter shows that the first step toward a fundamental performance improvement has been achieved," the company told The Associated Press. "However in the coming years, difficult measures will need to be taken given the difficult market situation."

Sanford C. Bernstein European autos research analyst Stephen Cheetham told the news agency that Volkswagen's third-quarter figures were significantly improved, but warned that the company faces a tough road ahead.

"A North American turnaround remains elusive, and the company looks unlikely to start firing on all cylinders in the near future," he reportedly said, noting the significant competition it faces there.

According to AP, VW net profit for the first nine months of 2005 rose 53% to EUR662m compared with EUR434m a year ago. Sales rose 5.3% to EUR69.9bn from EUR66.3bn.

The Associated Press said VW's operating profit in the first nine months was up to EUR2bn, compared with EUR1.2bn.

Volkswagen reportedly warned that competitive pressures would increase to the end of 2005, singling out markets in China and the United States, and added that the cost of raw material for making its cars was set to rise.

"Moreover, we believe that the high oil price and the resulting record-high fuel prices will further dampen automotive consumer confidence," the car maker told the news agency.

It reportedly added it would continue ramping up deliveries of new Jetta and Passat models in the United States, along with the Audi A4 and A6, but warned that because of competition it was unlikely the company would equal last year's sales there.

According to AP, VW said its Passat, Jetta, Golf R32, Audi RS 4 and Seat Leon models would continue to lure more buyers and increase market share in western Europe, particularly in its German home market.

"For this reason, we are reiterating our full-year forecast that global deliveries to customers will increase over the previous year," the company said, according to the Associated Press report.