Volkswagen Profit Drops 48% on Dieselgate Charges
Germany-based automaker Volkswagen reported third-quarter results Friday morning. The company posted a year-over-year revenue increase of 5.8% in the quarter to €55 billion and a year-to-date gain of 6.8% to €170.86 billion. One euro is approximately equal to $1.16.
VW made a larger-than-expected third-quarter contribution to a fund related to the buyback/retrofit programs for its diesel-engined cars sold in North America. The company said the programs were “more complex … more comprehensive, and technically more challenging expected.” VW took a charge of €2.6 billion to cover the added cost.
For the year to date through September, VW passenger car sales are up 2.4% worldwide to 7.29 million units and commercial vehicle sales are up 5.9% to 512,229 units. Sales for the first three-quarters of 2017 are down 2.2% in Germany but up 4.5% in North America and up 3.1% in China. VW has delivered more passenger cars in China for the year to date than it has in all of Western Europe: 2.89 million to 2.42 million.
Sales of VW-branded cars rose 2.7% in the first nine months of the year, while sales of Audi cars fell 2%. Porsche sales rose 4.3% year over year, while sales of the high-end Lamborghini and Bentley brands rose 2.2% and 11.5%, respectively.
Operating profit dropped 48% in the third quarter but is up 23% year over year for the first nine months of 2017. Pretax profit in the quarter was down 52.5% and up 29.3% for the year through September.
Cash flow from operations dropped 38.8% in the quarter while year-to-date cash flow is down 96.7%. That includes the €2.6 billion charge.
For the 2017 fiscal year, VW now expects deliveries to “moderately exceed” last year’s total. Sales revenues are forecast up 4%, up 6% to 7% excluding special items.
VW stock traded up nearly 3% on the XETRA late Friday, at €154.30 in a 52-week range of €123.25 to €157.40. The consensus price target on the shares is €159.17.