German automaker Volkswagen saw its first quarter profit jump 44 percent as it focused on selling more profitable models and worked past its scandal over diesel cars rigged to cheat on emissions tests.
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Costs and fines from the scandal that emerged in Sept. 2015 have dinged Volkswagen's large cash pile but the chief financial officer said Wednesday that the company was solid enough to handle added costs this year. Volkswagen also reaffirmed its profit goal for the full year.
After-tax profit rose to 3.4 billion euros ($3.7 billion) from 2.4 billion euros in the year-earlier quarter. The result beat the 3.1 billion euros expected by analysts surveyed by financial information provider FactSet.
Revenues, meanwhile, rose 10 percent to 56.2 billion euros.
The Wolfsburg-based company said the improvement came from tighter cost controls, a sales mix favoring its more-profitable models and shifts in currency exchange rates.
It also saw a better profit performance from its namesake Volkswagen brand. Operating earnings there rose to 869 million euros from a meager 73 million euros in the year-ago quarter. The Volkswagen brand has struggled with high costs and low profit margins. The group's other brands include luxury makes Audi and Porsche, as well as Skoda, SEAT and Lamborghini.
The company reaffirmed its profit goal of an operating return on sales of 6 to 7 percent.
Fines and related costs from the scandal reduced the company's cash reserve somewhat but CFO Frank Witter said the group retained "a strong financial foundation" despite facing further scandal outlays this year in double-digit billions. Net cash fell by 3.9 billion euros to 23.6 billion euros.
Volkswagen has agreed to $16 billion in civil settlements with U.S. authorities and car owners and has also accepted $4.3 billion in fines. The commpany has admitted installing software that turned off emissions controls when diesels were not on test stands. The result was that the car passed emissions tests but in everyday driving emitted up to 40 times the permitted level of nitrogen oxide, which can harm people's health.