Third-quarter operating profit at Volkswagen rose more than 50 percent thanks to higher earnings at its core VW brand.
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Q3 operating profit increased to 1.46 billion euros, easily beating the 1.31 billion average in a Reuters poll of 17 analysts.
“VW is at an all-time valuation peak reflecting both peak earnings and a bid premium: we believe the risks are skewed to the downside and rate the stock underperform,” Sanford Bernstein analyst Stephen Cheetham wrote.
Volkswagen reaffirmed it would earn at least 5.1 billion euros before tax in 2007 – one year earlier than first targeted – adding that its operating result would grow “substantially” over last year’s figure of 4.38 billion before special items.
“Our optimised cost structures together with improved unit sales will strengthen our competitiveness and earnings power in the long term,” the company said in a statement.
Cheetham said VW included a cautious note that most of its unit sales growth this year would come from emerging markets, according to Reuters.
“These markets (particularly China and Latin America) have been growing very fast, but they are volatile and less profitable than VW’s core markets,” he added.
Net liquidity at its automotive operations at the end of
Operating profit at its core VW brand more than doubled in the first nine months thanks to restructuring and improved sales.
This lifted its margin by over 1.6 percentage points to just over 3 percent for the period.
