The Volkswagen brand says its first quarter sales revenue grew by 7.1% year-on-year to EUR21.5 billion. Operating profit before special items rose by 4.8% to EUR921m.

The brand confirmed an operating return target of 4-5% for the entire year.

See also: VW Group Q1 profit dragged down by 'dieselgate'

Board Member for Finance Dr. Arno Antlitz sid: "New SUVs enrich our range of products. Focus on efficiency and cost discipline is bearing fruit. At the same time, the brand is investing strongly in future-oriented technologies."

The brand said it performed solidly in a challenging market environment in Q1. Volkswagen said it benefited from an improved product mix, positive developments in product costs and especially an improvement in fixed costs. In the first quarter, the operating return on sales was at about the same level as in the previous year, at 4.3%. In the reporting period, legal risks gave rise to special items in the amount of EUR0.4bn 'in connection with the processing of the diesel issue'.

"The Volkswagen brand has made a good start to the new financial year. The figures for the first three months show that our consistent focus on improving efficiency and cost discipline within the company is the right approach and is bearing fruit. We must continue with the approach which we have adopted with a view to sustainably improving the earnings power of Volkswagen. At the same time, we are investing strongly in future-oriented technologies such as the MEB, the digitalization of our products and the implementation of our product offensive," said Dr. Arno Antlitz Member of the Board of Management of the Volkswagen brand responsible for Finance.

In the first quarter, the brand saw deliveries fall by 4.5% to 1,456,400 vehicles as a result of the sluggish overall market. 

In terms of fixed costs, the Volkswagen brand recorded in the first quarter of 2019 an improvement of about EUR200m compared with the prior-year quarter. This improvement was chiefly due to the consistent implementation of the measures defined in the pact for the future ('Zukunftspakt'). "During the remainder of the financial year, we will need to make further efforts to accommodate risks arising from the markets," said Antlitz.

The Volkswagen brand is also working to improve the productivity of its plants globally. By 2025, the brand intends to boost the productivity of its plants by
30%. In addition to consistent investment discipline and plant deployment across the boundaries of brands and models, Volkswagen expects considerable efficiency effects for its plants in the future from the use of new technologies such as the Volkswagen Industrial Cloud.

In the first three months of 2019, net operating cash flow before cash outflow caused by the diesel issue amounted to about EUR0.6bn. 

For the current financial year, the Volkswagen brand continues to expect an operating return on sales within the target corridor of 4 to 5 percent. Significant financial impact as a result of the second stage of the changeover to the WLTP test cycle is not expected in 2019.

The Board of Management of the Volkswagen brand has set an operating return on sales target of at least six percent by 2022 in order to provide the funds required for all future-oriented investments in e-mobility and digitalization from its own resources and to shape the transformation of the industry.