Volkswagen AG, second largest car maker of world, stated that its profit for the first quarter paced up analyst’s estimation on more profits at its German luxury brand Audi. The auto maker reported on 26th April 2012 that it’s operating profit increased by 10 per cent, amounting to € 3.21 billion ($ 4.26 billion), under the review of € 2.91 billion during the last year.
These figures thrashed the average estimate of nine analysts who claimed € 2.66 billion. With this growth, the sales of the company expanded 26 per cent, resulting in € 47.3 billion. The shares of auto maker increased the most during five months.
Although the European market is witnessing a debt crisis, Volkswagen is still flourishing and grabbing the market share of its competitors with new product portfolio. The model line-up of Volkswagen starts from Up! a subcompact vehicle to sports cars of Lamborghini and 50-ton trucks. This German automotive manufacturer which includes brands like Skoda and Seat raised its first-quarter sales by 9.6 per cent resulting to 2.16 million units. The profits rejoiced by Volkswagen are at the expense of PSA Peugeot Citroen (UG) and Renault SA (RNO).
David Arnold, Sales Specialist, Credit Suisse Group AG, London, said, “It’s a very strong beat and flies in the face of the bearish mass-market view. VW just keeps printing money.”
Volkswagen marked an increase of as much as € 8.90, which is equivalent to 7.1 per cent, amounting to € 135.10. This trading is considered as the largest gain in the intraday sessions since 28th November; the share value of VW increased by 5.6 per cent at 11:57 am in Frankfurt. The shares of Volkswagen marked a growth of 15 per cent in 2012, which valued the company at € 58.3 billion.
Audi, the German luxury auto maker owned by Volkswagen, surpassed Daimler AG’s Mercedes-Benz during the last year and emerged as the world’s second largest luxury car maker. The revenues of Audi increased by 27 per cent amounting to € 1.4 billion euros during the period, mainly because of the luxurious sedans like Audi A6 and A8. The profits of Volkswagen were further driven by the addition of € 223 million from MAN SE (MAN), the German truck manufacturer, which is managed by the company.
Volkswagen is again aiming to achieve its last year’s operating profit, which was highest ever, € 11.3 billion euros, since the increased profits and deliveries have compensated the increased spending over development.
Juergen Pieper, analyst, Bankhaus Metzler, Frankfurt, said, “The outlook seems conservative after the first quarter, which should have been the toughest this year. The results are very strong.”
Demand in Europe slipped by 7.3 per cent in the first quarter, while the deliveries in china reduced by 1.3 per cent, which created an accumulation of unsold cars in the biggest auto market of world. The revenues from Volkswagen’s Chinese ventures, which are not combined in the operating results, surged 52 per cent, amounting to € 848 million. In Europe, the sale of company reported a slight increase of 0.5 percent, which took the market share of the company to 23.7 per cent from 21.9 per cent.
Apart from this, rest all car makers witnessed not so good times in the European auto market. Sales of Peugeot, the second biggest auto manufacturer of Europe, registered a downfall of 7.3 per in its revenues of first quarter and confirmed its estimate that the auto market of Europe will slip 5 per cent during this year. Following the league, Renault reported a drop of 9 per cent in its first quarter sales.
Although the auto market is facing ups and downs, Volkswagen is still looking for new ways of expansion, as it is eyeing to overtake General Motors (GM) and hold the badge of largest car manufacturer in world.
