Soon after beating analyst estimates and posting strong third quarter earnings boosted by cost cuts and strong demand for Volkswagen Group products in China, Brazil and the US, the core VW brand said nine month sales rose 8.3% year on year to EUR58.9bn (US$68.4bn) with operating profit more than doubled – before special items – to EUR2.5bn from EUR1.2bn in red ink last year.
Despite provision for the doubling of the originally expected cost of the North America 2.0TDi diesel engine buyback/retrofit programme in North America booked in the third quarter, operating margin improved to 4.3 (from -1.6%), leading to a slight rise in the full year forecast.
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The management board now expects operating return on sales (before special items) to be “moderately higher” than the previously forecast 2.5% to 3.5%.
“The Volkswagen brand is systematically implementing its Transform 2025+ strategy. Our model offensive is increasingly paying off, the turnaround programmes in the markets are taking hold, the brand’s new strategic orientation is producing good results overall. Our operational earning power has improved faster than we anticipated and we are well on the way to achieving our key strategic targets: to make Volkswagen competitive for tomorrow’s mobility,” CEO Herbert Diess said.
Unit sales rose 2.7% to 4.49m with strong gains in South America (+24.0%) and signs of recovery in Germany.
“We have returned to growth in all regions,” sales chief Jurgen Stackmann said.
Sales are still forecast to rise by about 10% this year but, with big spending planned, the medium- and long-term return on sales targets of at least 4% by 2020 rising to 6% by 2025 remained unchanged.
