• Apr 27, 2011

Volkswagen
has announced very impressive first quarter profits of €1.7 billion ($2.5 billion USD based on current exchange rates). That's more than three times the profit the Volkswagen Group earned in the first quarter of 2010, as revenue climbed 31 percent to €37.5 billion ($55 billion USD.). Profit from ongoing operations came in at an even more impressive €2.91 billion ($4.26 billion USD). In total, VW managed to move a record two million vehicles in the quarter, up 14 percent versus Q1 2010.

A big reason for VW's stellar sales is the automaker's continued success in China, where deliveries were up 20 percent on the quarter. VW says that it made €557 million ($817 million) from Chinese operations.

A 14 percent increase in global Audi sales also helped the bottom line, bringing in €1.1 billion ($1.6 billion). The Volkswagen Group reports Audi sales of 374,000 vehicles for the quarter. Interestingly, Audi brought in the same amount of money as the larger Volkswagen brand, which also brought in €1.1 billion.

VW has been spending big to expand and improve its lineup, but the German automaker's profits have helped keep the cash coffers stocked. The automaker currently has €19.6 billion in liquid cash ($29 billion in U.S. dollars), up €1 billion from the end of 2010. Hit the jump to read over the VW press release.

[Source: Volkswagen | Image: Damon Lavrinc/AOL]
Show full PR text
• Operating profit lifted to €2.9 billion (€0.8 billion)

• Two million vehicles sold in a single quarter for the first time

• Sales revenue up more than 30 percent to €37.5 billion

• Automotive Division net liquidity remains high at €19.6 billion

Wolfsburg, April 27, 2011 – The Volkswagen Group leveraged its prior-year momentum and maintained its growth rate in the first quarter of 2011. "Business developments in the first quarter demonstrate the Volkswagen Group's strength and robustness", said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, on Wednesday at the presentation of the interim report for the first quarter of fiscal year 2011.

Sales revenue climbed by 30.8 percent to €37.5 billion (Q1 2010: €28.6 billion). At 1.99 million, vehicle deliveries by Europe's largest automotive group were up 14.0 percent in the period between January and March, exceeding the prior-year quarter's strong figures. The Group's share of the global passenger car market rose to 12.0 percent in the reporting period (11.5 percent). Operating profit climbed to €2.9 billion (€0.8 billion). The operating return on sales rose from 3.0 percent to 7.8 percent year-on-year. The consolidated operating profit does not include the €557 million share of the operating result accounted for by the Chinese joint ventures (€303 million). These companies are included using the equity method and are therefore reflected in the financial result. The Wolfsburg-based Group's profit before tax amounted to €2.2 billion (€0.7 billion).The result after tax for the first quarter of the year increased to €1.7 billion (€0.5 billion).

CFO Hans Dieter Pötsch was also satisfied with developments in the first three months. "The Volkswagen Group has got off to a good start", said Pötsch, adding: "Our sound finances and continuous improvements in profitability are the basis for the Volkswagen Group's successful future". The positive overall development on the global automotive markets, and in particular the sustained high demand in China, India, Central and Eastern Europe, and North and South America, was the main earnings driver. In addition to the higher volumes, lower product costs contributed to ongoing profitable growth.

Automotive Division net liquidity remains high at €19.6 billion

In the first quarter of 2011, net liquidity in the Automotive Division increased by one billion euros as against year-end 2010, to €19.6 billion. This includes the cash outflows from the acquisition of the trading activities of Porsche Holding Salzburg (PHS) and the investment in SGL Carbon SE, Wiesbaden, totalling €3.5 billion. "Our net liquidity in the Automotive Division remains at a high level", said Pötsch. "This substantial basis is not an end in itself; rather, it provides us with the financial flexibility we need for our investments and to implement our Strategy 2018", he added. The Volkswagen Group has set itself the goal of becoming the global economic and environmental leader in the automobile sector by the year 2018.

The Volkswagen Group maintained its strict investment discipline with a ratio of investment in property, plant and equipment to sales revenue of 2.8 percent in the Automotive Division. This figure is expected to remain within the target corridor of up to around 6 percent of sales revenue for the full year. "We are continuing to make targeted, ongoing investments in new products, new technologies and new locations, always ensuring that our upfront expenditures are focused on safeguarding the future of our Company and generating adequate returns", he continued.

Brands and business fields

All brands and business fields within the Group recorded improvements in the first quarter. Overall, unit sales by the Volkswagen Group in the period from January to March rose by 19.3 percent year-on-year, to 2.0 million vehicles (1.7 million).

Global sales by the Volkswagen Passenger Cars brand in January to March rose to 1.1 million vehicles (0.9 million). Demand for the Polo, Tiguan, Touareg, Jetta, Passat Variant, Passat CC and Sharan models increased. The Volkswagen Passenger Cars brand's operating profit more than doubled in comparison to the first quarter of 2010, rising from €416 million to €1.1 billion.

Worldwide sales by the premium brand Audi increased by 18.1 percent in the first quarter to 374,000 vehicles (316,000 vehicles). Operating profit grew from €478 million to €1.1 billion. The Audi Q5 and Audi Q7 models recorded the highest growth rates. Demand for the new Audi A1, Audi A7 Sportback and Audi A8 models was also encouraging.

Unit sales by the Škoda brand increased to 181,000 in the period from January to March (142,000 vehicles). First-quarter operating profit rose to €187 million (€100 million). All Škoda's model series contributed to this success.

SEAT sold 93,000 vehicles worldwide (91,000 vehicles). The loss generated by the brand amounted to €12 million, after a loss of €110 million in the prior-year period. Higher volumes, reduced sales support measures and optimized marketing costs contributed to this.

Bentley benefited from improved conditions in the luxury segment. The brand's operating loss narrowed by €11 million compared with the prior-year period, to €25 million. Bentley was negatively impacted by upfront expenditures for new products and exchange rate effects.

Volkswagen Commercial Vehicles sold 108,000 light commercial vehicles worldwide in the first quarter of 2011. This corresponds to an increase of 47.4 percent compared with the prior-year period. The brand generated a first-quarter operating profit of €92 million thanks to the higher volume, following a loss of €16 million in the prior-year period.

The truck manufacturer Scania continued its positive development in the period from January to March 2011. At €376 million, operating profit was €162 million higher than in the previous year thanks to increased demand for heavy trucks and buses.

The Volkswagen Financial Services Division turned in yet another successful quarter. The first-quarter operating profit amounted to €287 million, up €119 million on the previous year.

Winterkorn: "Volkswagen is continuing to power ahead"

The Group is confident about 2011. "Volkswagen is continuing to power ahead", said Winterkorn, adding: "Thanks to our expertise in technology and design, we have a diverse, attractive and environmentally friendly range of products that meets customers' desires and needs".

Overall, global demand for passenger cars is expected to exceed the level for 2010. In some Western European countries, rising public debt and the end of subsidy programs will have a negative impact on demand for new vehicles. By contrast, an increase in new vehicle registrations can be expected in Central and Eastern Europe. The Volkswagen Group expects the positive trend in the strategically important markets of China and India to continue, and that demand will also rise further in the markets of North and South America.

"In 2011, the Volkswagen Group's nine brands will once again introduce a large number of fascinating new models to the market, thus further expanding our strong position in the global markets", said Winterkorn. In addition, the modular toolkit system, which the Volkswagen Group is continually optimizing, will have an increasingly positive effect on the Group's cost structure. However, the continuing volatility in interest and exchange rate trends and commodities prices will weaken the positive volume effect. "Volkswagen shifted into the fast lane in 2010 and that's exactly where we intend to stay this year", Winterkorn emphasized. The Volkswagen Group expects sales revenue and operating profit in 2011 to be higher than the previous year.


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  • 20 Comments
      Vineeth Vazhayil
      • 3 Years Ago
      Although a bit part player in the US, VW is number one in China and Europe (?). They are pretty big in Africa and South America too. They are betting big on India next. I guess the overall worldwide presence helps..
        Georg
        • 3 Years Ago
        @Vineeth Vazhayil
        VAG numbers 1.quartal selling numbers by world region/nation Asia/pacific 621,800 (548,500 China) +22.9% (+19.9%) west Europe (without Germany) 532,000 +6.6% Germany (homemarket) 267,300 +5% south america 220,900 +2.9% north america 143,900 (USA 92,800) +17.9% (+16.1%) east europe 109,200 +30.4% rest of the world example india 28,100 (+256.7% compared to 2010!)
      Ragav
      • 3 Years Ago
      I would like to add that the profits are underwhelming. VW may be 1st in Europe but not in China where they are 2nd (Ist is GM). Their market share in India is not even 5% despite their big bets. Comparing Ford's profits to VW, Ford is the clear winner. $2.6 billion on a revenue of $22 billion vs $2.5 billion on $55 billion. The profitability of Ford is 150% higher than VW. Anyone who knows a little bit of economics will have this view. The matter of fact here is the strength of Ford. Ford has a higher margin on each sale of a vehicle than VW . Ford has been able to achieve this with only a cookie cutter brand while VW has Audi and other elite brands in its group which brings in most of the profits.If Ford made Lincoln global and great, they would be the envy of other automakers. Before any criticism , comparing profits to revenue is fair unlike comparing no. of vehicles sold to profits. VW may sell cheap cars in China but they clearly don't bring in any profits.
        Georg
        • 3 Years Ago
        @Ragav
        sorry I have to lol Ford 1. revenue was $33billion not $22billion (http://www.autoblog.com/2011/04/26/ford-earns-2-6b-in-first-quarter-most-since-1998/) 2. pre tax profit was $2.8billion from $33billion revenue 3. after tax profit was $2.6billion from $33billion revenue VAG 1. revenue was 37.5billion Euro = $54.7billion not 55billion 2. pre tax profit is 2.9billion Euro = $4.2billion 3. after tax profit is 1.7million Euro = $2.5billion that means Ford has payed $0.2billion tax to the US government VAG has payed $1.7billion tax to the german government (which makes the government happy!) Ford 1.4million vehicles profit befor tax $2.6billion = $1857 profit befor tax each vehicle VAG 2.0million vehicles profit befor tax $4.2billion = $2100 profit befor tax each vehicle what do we lear? US tax is lower than German tax
          Georg
          • 3 Years Ago
          @Georg
          btw $33billion : 1.4million vehicles = $23,571 each vehicle $54.7billion : 2.0million vehicles = $27,350 each vehicle not to forget Ford 2/3 cars 1/3 light trucks and commercial vehicles VAG 90% car 10% commercial vehicles/light trucks/trucks
      psyabe
      • 3 Years Ago
      Anyone care to criticize the downgraded Jetta now?
        longducdong
        • 3 Years Ago
        @psyabe
        I will. Its HAS been downgraded. If you think otherwise youre blind and stupid. I think its a step in the wrong direction. And VW's profitibility stems from strong sales in China and an increase in sales from its luxury brand? Hmmm. Does that remind you of another car company?
          awootbot
          • 3 Years Ago
          @longducdong
          You are missing the point of the US Jetta. It's priced to compete fiercely now. If you shop seriously, the SE with premium is within $1,500 of a Hyundai Elantra and many thousands less than the rest of the pack. And, while those are all nice-driving cars, even non-car people like driving the Jetta more. If you're not paying close attention and actually buying cars in this class it's easy to let old biases come into play. Those don't always reflect reality. Try a new Jetta against it's price-similar competitors and you'll understand what game VW is playing. Good for them.
        Saint Sinner
        • 3 Years Ago
        @psyabe
        True. I see more new Jetta wagens then Elantrash, Cruzers or Fordcus.
        doctrsnoop
        • 3 Years Ago
        @psyabe
        Sure, it's a pos with a bad rear suspension, drum brakes and available 2.0 L. Can't help it if Americans don't care about that.
          LordBass
          • 3 Years Ago
          @doctrsnoop
          And how many Jetta buyers can name the style of rear suspension or type of rear brakes? The bulk of sales will remain 2.5L SE/SEL models, and the new GLI has the goodies that most of us would want in such a car. The old 2.0L is a pretty miserable loss leader, but that's all it is.
      MK6GTI
      • 3 Years Ago
      Everybody makes fun of the new Jetta.. VW is now laughing in those peoples faces. Their next tweet... "#WINNING"
      Matt Corkum
      • 3 Years Ago
      VW keeps raking it in. I love driving their cars, but I hate maintaining and repairing them. We recently bought a vehicle and nothing about VW made buying one appealing. I just couldn't do it. The drive is nice, but the quality has gone so far downhill it's not even funny. Add to that the poor warranty, the high cost of repairs and parts, and the worst financing deals out there, and you have a former VW customer. Overpriced cars make a lot of money - VW is tops at that lately.
      Toold Forthis
      • 3 Years Ago
      I own a VW Golf IV and I can tell you with confidence that its parts and interior are made of compressed ****.
      artic
      • 3 Years Ago
      Jetta for the US, good cars for the rest of the world.
        awootbot
        • 3 Years Ago
        @artic
        Stop hating. I shopped for a low-price sedan for my "significant other" and it was hands-down the best-driving car. OK, so it's not as nice as the Euro Jetta or the Golf inside, but it was a solid win in it's class and price range.
      Ragav
      • 3 Years Ago
      @Georg Sorry! Ford's revenue was $33 billion dollars. VAG 1. revenue was 37.5billion Euro = $54.7billion not 55billion What does that small rounding off do? No reports on Autoblog mention that VW had a $4.2 billion pretax profit. Where is the proof? The $4.2 Billion figure is the goose in the park. So, u have done ur comparisons based on that random number. BTW,Ford doesn't need to pay tax before this profits compensate the losses they had a while ago.Please read the US tax code.
        Georg
        • 3 Years Ago
        @Ragav
        Proof VAG inverstor relation publications stop making pointless compares... 1. VAG earns much more money each vehicle sold than Ford proofen fact 2. They need to pay more tax because they are based in a different nation with a different tax system 3. They were out of trouble since a very long time so they have no excuse to pay no tax like Ford... 4. VAG delivers constantly strong numbers even in the worst time of the world wide crisis they made huge win as the only big car producer..
      gvblake22
      • 3 Years Ago
      Anyone know what Volkswagen's best selling model is? I feel like I see more GTI's on the road than anything else. Or maybe it's just because they are more eye-catching.
        LordBass
        • 3 Years Ago
        @gvblake22
        In the US, the Jetta by a million miles. The GTI is a footnote in the US lineup. Great car though.
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