Volkswagen Czech Republic unit Skoda Auto on Monday said net profit dipped 32% as the koruna’s rise against the euro built on a worldwide downturn in car sales.

The automaker’s 10.82bn koruna (US$551.3m) net profit for 2008 compared with CZK15.98bn the previous year with foreign exchange losses largely to blame as the koruna firmed against the euro.

“We weren’t able to compensate for the exchange rate and that has contributed to the results,” finance director Holger Kintscher told Dow Jones Newswires.

Skoda last year temporarily cut its work week to four days as car sales plunged in its key western Europe market.

But sales of the small Fabia hatchback soared after Germany and other western European countries subsidised the scrapping of old cars in exchange for new models and Skoda was soon back to a five-day week and adding shifts.

“The success we are now having with the Fabia and the current quantity of orders – higher than last year – are very positive signals,” said CEO Reinhard Jung.

The company delivered 675,000 cars to customers last year, up 7% year on year.