VW drives up profit

July 27, 2001 Posted: 0719 GMT

LONDON (CNN) -- Europe's biggest automaker Volkswagen said on Friday profit rose 13 percent as international sales offset a decline in its domestic market.

The German company said net profit rose to 444 million ($390 million), or 1.18 a share, in the three months to June 30. That compares to second-quarter profit of 394 million, or 0.95 a share, in the year-ago period.

Pretax profit rose 17.4 percent to 805 million, while analysts polled by Reuters expected a pretax profit of 810 million. Sales rose almost 10 percent to 23.7 billion, according to German HGB accounting standards.

Profit, at the company that makes the Beetle, Audi and Rolls-Royce cars, was 624 million, according to International Accounting Standards.

Volkswagen's car sales in Germany fell 8.3 percent to 255,000 units, as the economy experiences an economic slowdown. Western European car sales  rose 2.6 percent to 828,000 in the second quarter.

Germany's Ifo economic institute predicts the economy would grow a meager 1.2 percent this year, compared to earlier forecasts of 2.1 percent and predicts a 60 to 70 percent chance that a downturn would bottom out in the second half.

"We expect that a fall in unit sales in Germany resulting from the weaker than originally planned development of the automotive market will be more than compensated by higher sales outside Germany in the second-half of the year," the company said.

Volkswagen said it was sticking to earlier forecast that it expects higher full- year earnings and sales compared with last year.

"In order to achieve our stated earning expectations for 2001, we shall continue to implement cost reduction measures initiated in the current year with the aim of compensating for the fall in earnings in Germany," VW said.

The Wolfsburg, northern Germany-based company did not provide detail of that cost-cutting programme introduced in June. 

Shares in Volkswagen (FVOW) inched up 0.8 percent to 52.46 in early Frankfurt trading. The stock has fallen about 17 percent from a peak of 62.99 percent in March.

	Want the full story? Search for free company info...
	Enter Company Name:-