Volkswagen AG Earnings Triple on Strong Demand from China

Volkswagen AG, Europe’s largest automaker, has just reported an operational profit in the first quarter of the year, after the Audi and VW brands attracted ever more Chinese customers. It now comes as no surprise that SEAT is also entering the ever-growing Asian market.

The group’s earnings before interest and tax more than tripled to €2.91 billion, from the €848 million achieved in the same period of last year, the Wolfsburg, Germany-based company said. Meanwhile, sales rose 31 percent by value to €37.5 billion. In addition, VW’s Chinese joint ventures, which are not included in the company’s operating result results, contributed €557 million to the first quarter profit.

“It’s a very strong result driven by a strong top line that benefited from a strong mix” of more high-end models, said Adam Hull, a London-based analyst with WestLB who, according to Bloomberg.

Volkswagen shares rose as much as €6.15 or 5.1 percent, to €126.85, indicating that the results may have exceeded market expectations. For the year, shares have gained 3.7 percent, lifting VW’s market value to €55.7 billion. The company expects sales to increase 5 percent in 2011 to 7.2 million vehicles, largely due to emerging markets like China, Brazil, Russia and India.

Audi contributed 38 percent to the group’s operating profits, doubling earnings before interest and tax to €1.12 billion. The VW brand’s operating profit also more than doubled to €1.06 billion, while the Seat and Bentley both narrowed their losses in the quarter.

“Volkswagen is continuing to power ahead,”
Chief Executive Officer, Martin Winterkorn, said in a statement. “Volkswagen shifted into the fast lane in 2010 and that’s exactly where we intend to stay this year.”
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About the author: Mihnea Radu
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Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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