(Adds sales figures, detail).

WOLFSBURG, Germany -(Dow Jones)- Volkswagen AG (VOW.XE) said Thursday that operating profit at its core VW brand slumped to EUR561 million in 2009, as sharply contracting demand for cars amid the economic downturn took its toll. The brand posted EUR2.72 billion in operating profit in 2008.

Volkswagen "expects the climate in the global automotive industry to remain harsh," the company said in a statement.

"Although a slight recovery in the global market is expected in 2010, the volume reached in 2007 is unlikely to be repeated before 2012," it said.

The operating loss at VW's troubled Spanish Seat brand widened to EUR339 million last year from EUR78 million in 2008 as the economic woes embroiling its domestic market added fuel to the fire.

Its Czech Skoda unit contributed EUR203 million to Volkswagen's earnings after EUR565 million in the prior year. Volkswagen's commercial vehicles unit posted a profit of EUR313 million after EUR375 million in 2008, thanks mainly to a gain related to the sale of the Brazilian heavy-truck unit to MAN SE (MAN.XE).

The Swedish Scania heavy-truck brand contributed EUR236 million to Volkswagen's earnings last year.

VW's financial services operations reported an operating profit of EUR606 million in 2009 after EUR893 million in the prior year, making it the second largest earnings contributor after the Audi AG (NSU.XE) premium brand. Audi earlier this week reported 2009 operating profit of EUR1.6 billion.

Volkswagen had already released key earnings figures for the group last month. Net profit declined 80% year-on-year in 2009 to EUR960 million. Operating profit slid 71% to EUR1.86 billion in 2009, while pretax profit was down 81% at EUR1.26 billion and revenue skidded 7.6% to EUR105.2 billion.

The company reiterated that operating profit, revenue and vehicle sales are expected to come in higher this year than in 2009.

Volkswagen's earnings tanked last year, but Europe's largest automaker by sales steered better through the industry gloom compared with most rivals as state-backed scrapping incentive schemes on its home turf and a large presence in China and Brazil had stabilizing effects.

Volkswagen said vehicle sales rose 27% in the first two months of the year to 1.02 million cars and trucks. The core VW brand posted a 29% sales rise to 664,400 cars in the January-to-February period.

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