VW Results Flat as Audi, Porsche Sales Hit Record


Record quarterly sales of luxury Porsches and Audis helped Volkswagen, Europe's biggest carmaker, to stick to its full-year target for flat earnings on Wednesday, easing some concerns about the costs of its new manufacturing platform.

Shares in the German group, which last month denied a report it was at risk of missing its financial targets because of higher costs, were over 4 percent higher around mid-session.

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However, some analysts expressed concern about the level of discounting on Volkswagen's (VW) mass-market cars in a weak European market, and remained to be convinced its new manufacturing platform would deliver the promised benefits.

"An outlook for flat earnings is anything but overwhelming," said Frankfurt-based Bankhaus Metzler analyst Juergen Pieper.

"Auto markets were in a dire state last year, that's why year-on-year results look so good today."

Slumping auto demand in core European markets, where VW sells almost 40 percent of its models, has caused sales in the debt-stricken region to drop for seven straight quarters.

VW has weathered the storm better than rivals and even raised its share of the European market while mass-market peers PSA Peugeot Citroen and Fiat are grappling with shrinking volumes.

Much of that has been due to luxury division Audi and sports car maker Porsche, which was fully absorbed by VW a year ago, with both brands also enjoying double-digit percentage sales growth in China and the United States.

Group operating profit rose almost a fifth to 2.78 billion euros ($3.8 billion) in the third quarter, matching the mean forecast of 14 analysts in a Reuters poll.

"Profit was bang in line with expectations and the outlook still stands - that's what the market needs from the revenue side of things to be cheerful," said Frank Biller, an analyst with Landesbank Baden-Wuerttemberg.


VW reaffirmed goals to match last year's record operating profit of 11.5 billion euros and to push deliveries and sales to record levels this year.

Audi and Porsche contributed a combined two thirds to VW's 8.55 billion-euro nine-month profit and hold out the prospect of further growth, with Porsche adding a fifth model in 2014, the Macan compact SUV.

Nine-month deliveries at Stuttgart-based Porsche jumped 15 percent to 120,000 while sales at Audi were up 8 percent to 1.18 million, about 30,000 units behind luxury-market champion BMW that Audi has pledged to eclipse by 2020.

But with adverse foreign exchange moves and painful discounts in core European markets sparking a 4 percent drop in third-quarter group sales to 47 billion euros, VW cautioned its full-year targets were "very ambitious."

"We are focusing on disciplined cost and investment management," said finance chief Hans Dieter Poetsch who recently warned VW might need to defer some non-product investments.

"That's particularly important given the fact that the economic environment isn't expected to improve in the short term," he added, without putting a figure on any cost cuts.

VW said switching production of small and medium-sized models at its four main passenger-car brands to its "MQB" modular platform "will have an increasingly positive effect" on the group's cost structure, without elaborating.

Some analysts have warned the cost of MQB, designed to cut material outlays 20 percent and shorten vehicle assembly times 30 percent, will keep weighing on profits and that its savings may miss targets.

VW shares, which have lagged the European autos index by 19 percent this year, were up 4.6 percent at 182.95 euros as of 1220 GMT.