Volkswagen Group has reported an impressive 14.1% increase in net profit in the second quarter, despite acknowledging competitive pressures and difficulties in some emerging markets.
Second quarter profit after tax was up 14.1% to EUR3.25bn on revenues of EUR51bn, 2.2% down on last year. Operating profit was also down by 3.1% on last year, to EUR3.33bn in the second quarter, a figure that was nevertheless higher than the EUR3.31bn average of 13 analyst estimates compiled by Bloomberg.
Go deeper with GlobalData
For the first six months of the year, Volkswagen Group said it achieved “solid business growth” despite the ongoing difficult market environment. At EUR98.8 billion (EUR98.7 billion), sales revenue in the first six months was only slightly up on the prior-year period “due to significant negative exchange rate effects”. Operating profit grew by 7.0% to EUR6.2 billion (EUR5.8 billion) and the operating return on sales rose to 6.3% (5.9 %).
First half profit before tax amounted to EUR7.8 billion (EUR6.6 billion). The return on sales before tax rose to 7.9% (6.7%) in the first six months, due among other factors to measurement effects in the financial result. Profit after tax was EUR5.7billion (EUR4.8 billion).
“Despite headwinds, our financial performance in the first six months was good. In light of the continued strong competitive pressures, the tense situation in some emerging economies and the fundamental technical and economic changes happening in our industry, we are working hard to create all the conditions we need today to ensure success tomorrow. I am confident that we will not flinch from the path we have chosen,” said Dr. Martin Winterkorn, VW CEO and Chairman.
The company noted that while global car demand continued to rise in the first six months, the pace of growth eased off and trends were mixed at a regional level. The number of new registrations in the Asia-Pacific region, Western Europe, North America and Central Europe increased year-on-year, while the markets in South America and Eastern Europe recorded market volumes that were significantly lower year-on-year in some cases.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“The macroeconomic situation has rarely been so volatile and fragmented – from exchange rates down to the declines in the emerging economies. That’s why it’s more important than ever before for us to stick to our disciplined cost and investment management and to maintain our solid financial position so that we can achieve our profitability targets and strategic goals for 2018,” said Chief Financial Officer Hans Dieter Pötsch.
Guidance unchanged
The outlook for the current year was restated. Depending on economic conditions, Volkswagen is expecting 2014 sales revenue for the group and its business areas to move within a range of 3 % around the prior-year figure. In terms of the group’s operating profit, Volkswagen is forecasting an operating return on sales of between 5.5 % and 6.5 % in 2014 in light of the challenging economic environment, and the same range for the Passenger Cars Business Area.
“Our group has recorded strong growth in recent years. This offers us many opportunities across all of our brands to become more efficient and to leverage synergies -our urgent priority is now to exploit this potential,” said Winterkorn, adding: “Our ambition is to be a leader in shaping the future of the automobile. We are now creating the conditions for doing that with our ‘Future Tracks’, our group wide future and efficiency orientated programme.”
See also: Volkswagen – 2Q14 results insight
