Volkswagen Group has beaten analyst estimates and posted strong third quarter earnings boosted by cost cuts and strong demand for its products in China, Brazil and the US.
VW Group third quarter operating profit before special items, interest and taxes was up 15.1% on last year to EUR4.31bn. In the first nine months, operating profit stood at EUR13.3bn, 17.4% ahead of the same period last year.
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The company booked EUR2.6bn in the third quarter to fix diesel engines in the US and that took net profit down to EUR1.14bn (Q3 last year, EUR2.34bn).
Third quarter deliveries of vehicles were up 6.3% to 2.65m and in the first nine months grew by 2.6% to 7.8m.
Sales revenue from January to September climbed 6.8% to EUR170.9bn, and operating profit before special items likewise rose from 7.0 to 7.7%. “The interim results for the period up to the end of September are very impressive and underpin the trust of customers worldwide in our brands and their products. For this we are thankful,” said Matthias Müller, VW Group CEO. “These results were also achieved thanks to the hard work of all employees in our Group, who despite the difficult challenges they sometimes face simply do a good job.”
“Although there is still a lot to be done, we can definitely be satisfied with what we have achieved so far.”
“Earnings in the first nine months make us quite optimistic about the year as a whole,” said Frank Witter, VW Group’s finance chief. “This is a strong foundation that we can build on. With net liquidity of around EUR 25 billion in the Automotive Division, we have an adequate financial cushion. It is important to remember, however, that in this year alone we have seen outflows of around EUR 14.5 billion for the diesel issue.” Witter also stressed that the diesel issue was nowhere near an end and would continue to necessitate great efforts throughout the entire Group. “Although there is still a lot to be done, we can definitely be satisfied with what we have achieved so far.”
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By GlobalDataCEO Matthias Müller added: “Our operating business is strong, our financial position robust. And with our ‘TOGETHER – Strategy 2025’ we have a compelling plan for the future that is being implemented apace. Yet the latest interim financial statements also show what we can jointly achieve in our brand alliance, even under difficult conditions. If we continue to collaborate closely and make even better use of the synergies available in the group, this will become a critical factor for success in the profound structural transformation our industry is undergoing.”
VW raised its guidance on operating return on sales for 2017, saying it would be ‘moderately higher’ than the original target of 6-7%.
In the first nine months of the year, VW Group vehicle sales were up 2.6% to 7.8m. In the US, sales were up 7.3% to 457,000 units. In China, sales were up 1.4% to 2.9m units. Brazilian sales were up 15% to 225,400.
The Volkswagen Group delivered over 1m vehicles to customers for the first time in September, the highest level ever for a single month: at 1.01m, deliveries were 6.6% up on the previous year. This represents the best monthly performance in the history of the Volkswagen Group. Fred Kappler, Head of Group Sales, commented: “This record result demonstrates the strength of the Volkswagen Group. Vehicles from our brands are thrilling more and more customers worldwide – our new SUVs in particular are very popular. China continues to play an important role in this respect.”
In September, VW Group delivered 436,700 vehicles to customers in the Asia-Pacific region in September, 6.1% up on the previous year. It said the increase is ‘chiefly attributable to good developments in China, where many customers chose the newly-launched Terramont and Tiguan from Volkswagen, the Audi A4L and the ŠKODA Kodiaq. In total, 406,500 vehicles (+6.3%) were handed over to Chinese customers in September’.
