Volkswagen Group has posted record first half earnings, driven by strong Audi and Porsche sales.

The company lifted its profit margin outlook for the year, saying it expects an operating return on sales of 6.0-7.5%, versus 5.5-7% previously.

First half operating profit reached record EUR11.4bn (previous EUR10bn record posted in pre-pandemic 2019) and VW said the impacts of the Covid-19 pandemic and global shortage of semiconductors were ‘successfully contained’. VW said the record operating profit was driven in particular by the premium brands Audi and Porsche and by Volkswagen Financial Services.

H1 deliveries increased by 27.9 percent to 5.0 (3.9) million vehicles over the weaker prior-year period, which was impacted by the pandemic. Sales revenue even rose more strongly by 34.9 percent to EUR 129.7 (96.1) billion. Higher earnings were mainly due to increased vehicle sales, improvements in the product mix and prices as well as positive effects from the valuation of raw material hedges. One-off restructuring expenses of EUR 0.7 billion had a negative impact.

Herbert Diess, CEO of the Volkswagen Group said: “We’re keeping up our high pace, both operationally and strategically. The record result in the first half of the year is clear proof of how strong our brands are and how attractive their products are. The premium segment performed especially well with double-digit returns, as did Financial Services. Our electric offensive is picking up momentum and we will keep on increasing its pace in the months to come. We are also realigning the company with our new Group strategy NEW AUTO so that we can tap future profit pools. In doing so, we are preparing Volkswagen to play a leading role in the new world of mobility.”

VW said the premium brands Audi and Porsche performed especially strongly, posting record deliveries for the first half of the year and a double-digit operating return on sales of 10.7 and 17.6 percent, respectively. Due to increased vehicle sales and stronger demand for higher-margin models, group sales revenue rose significantly by 34.9 percent to EUR 129.7 (96.1) billion.

A total of 171,000 all-electric vehicles (BEVs) were delivered worldwide by the end of June, more than twice as many as in the prior-year period (+165 percent). After 60,000 BEVs were delivered to customers in the first quarter, that figure increased significantly as planned to 111,000 BEVs in the second quarter. The share of vehicles based on the Modular Electric Drive Toolkit (MEB) relative to all BEVs was already over 60 percent in the second quarter. The BEV ramp up will accelerate further in the course of the year due to the expanded model range. The Group has also systematically ex-panded its portfolio of models with a plug-in hybrid drive (PHEV) – and there is high customer demand for them: A total of 171,000 PHEVs were delivered in the first half of the year, more than three times the figure in the prior-year period (+204 percent).

In a cautious note, VW said the risk of bottlenecks and disruption in the supply of semiconductor components has intensified throughout the industry and it expects adverse impacts “will tend to affect the second half of the year.”