The first-quarter operating profit of Volkswagen nearly tripled

Article by Christian Andrei, on August 25, 2010

The first-quarter operating profit of Volkswagen nearly tripled after all of its core brands posted improvements. In particular, its flagship VW brand recorded a striking turnaround. VW's group results were reported last Wednesday, indicating the growth of its "war chest" by more than 14 billion euros ($18.7 billion) due to a rights issue.

In a statement, finance chief Hans Dieter Poetsch said that the company is optimistic about its future business development. He also said that VW‚ top priority remains to be "safeguarding and expanding [its] financial strength."

These financial results indicate the strength of VW's underlying earnings quality. Frequently, these results can be inflated by lower warranty costs or the releases of built-up provisions, which the market tends to value at a discount. The report also showed the improvement at every group marquee.

However, the financial figures for its supercar brands (Bugatti and Lamborghini) are not stated since VW does not report their figures separately. The VW brand posted a quarterly operating profit of 416 million euros, which translates to a margin of 2.2% -- significantly better than the forecasts.

The brand's earnings nearly doubled, when compared with the quarter that ends in December. For the entirety of last year, VW revealed a profit of 561 million euros on revenue of 65.4 billion.

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