Falling Porsche, Audi sales hurting VW profit

Frankfurt

VOLKSWAGEN AG's first-quarter profit fell 7.1 per cent led by declines at the key Porsche and Audi brands while costs to develop a range of new electric and connected cars rose. Profit fell to 3.9 billion euros (S$5.95 billion) through March.

Excluding special items relating to legal risks of 1 billion euros, operating profit rose to 4.8 billion euros, the carmaker said. The profit drop comes as China's passenger car market, where VW last year sold 42 per cent of its vehicles, contracted for a 10th month in a row.

CEO Herbert Diess in April said he was optimistic about a demand recovery during the second half of the year. Deliveries at Porsche and Audi fell by 12 per cent and 3.6 per cent.

Both key profits contributors are still grappling with the fallout from new emissions tests in Europe, while Porsche also cited model changeovers.

Revenue at the main VW car brand, accounting for about half of global deliveries, rose 7.1 per cent. The result was positively impacted by the valuation of financial instruments, which can be highly volatile, Chief financial officer Frank Witter said on Thursday in a statement. He warned of growing economic risks this year.

VW preferred stock closed 0.7 per cent lower at 155.04 euros on Tuesday, valuing the company at 79.1 billion euros.

German stock markets were closed on Wednesday due to a public holiday. The carmaker confirmed its guidance - excluding special items - on deliveries, revenue and operating result.

VW's decision in March to shelve a partial share sale of the Traton SE trucks unit citing market conditions has disgruntled investors, with Swiss train maker Stadler Rail AG since completing a successful listing. BLOOMBERG