Frankfurt - Volkswagen’s profit rose 3.4 percent in the first quarter, the first time the carmaker hasn’t set aside billions of euros in provisions since admitting in September to rigging vehicles to pass emissions tests.
Operating profit climbed to 3.44 billion euros ($3.83 billion) from 3.33 billion euros last year, the Wolfsburg, Germany-based manufacturer said in a statement. The result included about 300 million euros in positive special items, including currency-related adjustments on the provisions Volkswagen set aside to cover costs related to the diesel cheating. Profit at the namesake VW brand crumbled 86 percent to 73 million euros.
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The company has “achieved respectable results under difficult conditions”, Chief Executive Officer Matthias Mueller said in the statement. “2016 will be a transitional year for Volkswagen that will see us fundamentally realign the group”.
Volkswagen is shifting its focus from the diesel-emissions scandal toward accelerating turnaround efforts at its struggling namesake car brand. The company set aside 16.2 billion euros last year to fix as many as 11 million diesel cars worldwide with manipulated engine-control software and pay for fines and lawsuits. Now it must revive fading margins at the VW passenger-car unit, its largest division by sales volume, in order to reduce dependence on profits generated by luxury marques Audi and Porsche.
Volkswagen stuck to its full-year outlook, saying revenue will decline as much as 5 percent, while the operating profit margin excluding special items will be in a range of 5 percent to 6 percent of revenue after reaching 6 percent last year.
The shares fell 2.3 percent to 134.75 euros at 9.12am in Frankfurt. The stock has rebounded 3.1 percent this year compared to a 3.8 percent drop in the benchmark DAX Index.
Volkswagen still has a long way to go to put the crisis into the past. Investigations into the origin of the cheating will drag on until the end of the year, and the company must hammer out a settlement with US authorities by the end of June. A European recall will probably last until at least early 2017. The revelations of cheating last September triggered the departure of former CEO Martin Winterkorn and VW’s first annual operating loss since 1993.
Despite the woes, Europe’s largest automaker eked out 0.8 percent growth in worldwide deliveries to 2.5 million vehicles in the year’s first three months, passing global market leader Toyota’s 2.46 million. Revenue fell 3.4 percent to 51 billion euros. Volkswagen plans in mid-June to present a new strategy through 2025, with eight key initiatives including digital features and electric vehicles.
BLOOMBERG