Volkswagen has announced today that its Group net profit in Q1 2003 was 202 million euros, 67.8% down on the figure achieved in Q1 2002 (627 million euros). However, the company said that the result was as expected and said the decline was due to a number of factors including model ramp-ups and adverse exchange rate movements.

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Unit sales in Q1 2003 were put at 1.22 million euros, which compares with 1.18 million euros in the same quarter of 2002. Sales revenue was 20.7 billion euros versus 21.3 billion euros last year. Operating profit declined to 604 million euros in Q1 2003 against 1.13 billion in Q1 2002.

Volkswagen said that major factors impacting on operating profit were model ramp-ups, involving higher start-up costs and upfront expenditures, as well as negative effects from exchange rate movements.

The company warned against extrapolating the first quarter result for the year as a whole and said that it expects operating profit to improve substantially in the course of the year. In a statement, VW said that it expected to see increasing unit sales on an expanded and updated product range – including the Touareg, Touran, Audi A3, Golf and the new generation Transporter.

VW also said that it would benefit from continuing programmes aimed at optimising product costs and by reduced capital investments (excluding ‘product-related programmes’).

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The company expects to ‘see a significant improvement in operating profit, especially in the third and fourth quarters’ and confirmed that its forecasts for full year 2003 are unchanged.