VW's third-quarter profit falls on Europe gloom and technology costs
BERLIN -- Volkswagen's third-quarter underlying profit fell by a fifth as the deepening slump in European car markets and costs of a technology overhaul weighed on the automaker's results.
Operating profit declined to 2.34 billion euros ($3.04 billion) from 2.89 billion euros a year earlier, the company said today.
VW reaffirmed its goals to increase vehicle sales and revenue for the group in 2012 and to match last year's operating profit of a record 11.27 billion euros.
"Although the times aren't easy, it's up to us to systematically continue along our chosen path," CEO Martin Winterkorn said in a statement. "We therefore remain committed to our ambitious goals for 2012, despite growing headwinds."
VW said the increasingly worsening economic situation in western Europe burdened the auto industry between July and September.
"VW's revenues look very good and operating profit was in line," said Juergen Pieper, an analyst with Bankhaus Metzler in Frankfurt. "Volkswagen's performance from a sales perspective is certainly the best worldwide."
VW is saddled with costs to roll out its new MQB architecture that underpins the latest-generation VW Golf, Audi A3 and other models.
The group's nine-month operating profit fell to 8.84 billion euros ($11.4 billion) from 8.98 billion euros a year earlier as demand weakened and discounts climbed in Europe. Nine-month revenue rose 24 percent to 144 billion euros on the back of higher vehicle sales. Unit sales for the group's 12 brands increased 12.5 percent to 7 million vehicles with the group's share of the global passenger-car market increasing to 12.6 percent compared with 12.3 percent in the same period of 2011.
Net liquidity in the automotive division following the full integration of Porsche, the acquisition of motorcycle manufacturer Ducati and the increased stake in German truck maker MAN amounted to 9.2 billion euros at the end of September, compared with 17 billion euros at the end of December 2011.
VW is relying on growth in China and the United States to offset a slump in Europe, which is poised to suffer its biggest annual new-car sales decline in 19 years in 2012.
The company has recently stepped up efforts to respond to the crisis. In September, the company reduced its internal sales forecast for 2012 by roughly 100,000 vehicles -- more than 1 percent of annual deliveries, a person familiar with the matter said at the time. The company is also cutting back parts purchases by as much as 10 percent and demanding lower prices for components, suppliers said.
VW plans to halt European production of the mid-sized Passat for five days through the end of the year, and the Audi luxury brand stopped assembling the A6, A7 and A8 sedans for a week in October to adapt to slower demand, especially in southern Europe.
VW has become "more cautious" on the European market for next year, CEO Winterkorn said in Sao Paulo this week.
VW plans to export 200,000 cars to China in 2013 to boost utilization rates at European plants and keep inventory under control in the region.
Reuters and Bloomberg contributed to this report