Cost cutting and an improving European car market helped Volkswagen (VW) beat first-quarter profit forecasts, easing the pressure on management following the shock ouster of long-standing chairman Ferdinand Piech.
Four days after Mr Piech quit in a showdown with his CE, Europe’s largest car maker posted a 17% rise in operating profit and the first quarterly increase in earnings for seven years at Spanish division Seat.
Operating profit reached €3.33bn, VW said on Wednesday, close to the top end of forecasts in a Reuters poll of analysts and well above the average estimate of €3.12bn.
VW shares were up 1.3% to €243.40 by 9.25am GMT, one of the biggest gains on Germany’s blue-chip DAX index.
With Mr Piech raising question marks about CEO Martin Winterkorn’s ability to drive through improvements at VW, analysts were particularly relieved by signs of progress with the group’s modular production strategy which aims to use a core range of components across a wide variety of models.
“These are good numbers,” Bankhaus Metzler’s Juergen Pieper said. “The modular production strategy is progressing and tailwinds may grow over the course of the year,” he said, citing positive currency effects and cost savings at the core VW brand.
Earnings were boosted by a strengthening economic recovery in Europe — destination of 40% of the group’s car sales — and by progress in the VW brand’s drive to cut costs by €5bn a year by 2017.
Challenging year
However, a slowdown in emerging economies, falling deliveries in the US and a collapse in Russian demand pose challenges for VW and still leave questions over Mr Winterkorn’s strategy.
The underperformance of the VW brand in the US and Latin America was one factor leading Mr Piech to provoke the two-week confrontation with VW’s CEO that ended up forcing the chairman to resign.
The group said cost cuts boosted earnings by “a low triple-digit million-euro” amount at the VW brand between January and March, lifting the brand’s operating margin to 2% from 1.8% — still far off its 6% long-term goal.
“We have always emphasised that 2015 will be a challenging year for the automotive industry as a whole, and also for us,” Mr Winterkorn said.
“Our key figures show that the VW group remains on course, despite the headwinds.”
The German group still expects higher unit sales, revenue and an operating margin between 5.5% and 6.5% this year, after it reached 6.3% last year.
“The environment is getting better, there’s a good chance they’ll raise their margin target,” Mr Pieper said.
Reuters
FRENCH VERSION
Le groupe dit réductions du coût intégral boosté les gains par montantde « un faible à trois chiffres millions d’euros » à la marque VW entrejanvier et mars, soulevant la marge d’exploitation de la marque à 2 %, de1,8 %, encore loin de son objectif à long terme de 6 %.
« Nous avons toujours souligné que 2015 sera une année difficile pourl’industrie automobile dans son ensemble et aussi pour nous », a déclaréM. Winterkorn.
« Nos chiffres clés démontrent que le groupe VW reste en cours, malgréles vents contraires ».
Le groupe allemand s’attend toujours à une hausse des ventes d’unité,revenu et une marge opérationnelle entre 5,5 % et 6,5 % cette année,lorsqu’elle atteint 6,3 % l’an dernier.
« L’environnement est de mieux en mieux, il n’y a de bonnes chancesqu’ils vont augmenter leur objectif de marge, » a déclaré M. Pieper.
