Porsche, Audi steer VW to profit
wolfsburg — Record Audi and Porsche sales helped Volkswagen swing to a record underlying profit in 2016, although a bigger-thanexpected charge from the diesel emissions scandal meant it missed estimates for its operating profit.
Sales of the German carmaker’s luxury brands lifted underlying operating profit before special items 14 per cent to €14.6 billion ($15.5 billion) in 2016, after the company reported its biggest ever loss in 2015. VW forecast broadly stable earnings this year.
Underlying profit was broadly in line with forecasts for the world’s biggest car manufacturer by volume sales, which hiked its dividend more than expected after group sales rose to new highs, with an 8.1 per cent jump in fourth quarter deliveries.
Volkswagen (VW) is struggling with the fallout from its admission 17 months ago that it rigged US diesel emissions tests, a scandal that some analysts have estimated may cost it more than $30 billion in fines, compensation and vehicle refits.
VW has since embraced a costly shift to more electric vehicles and last year eclipsed Toyota as the world’s top-selling carmaker with record deliveries of 10.3 million. Although group sales fell four per cent in January on the back of national holidays and a tax hike on small engine cars in China, its biggest market, VW forecast an underlying operating margin of between six and seven per cent for 2017, compared with the 6.7 per cent it achieved last year.
But the damage from the emissions cheating affair took its toll, with VW booking biggerthan-expected one-off charges of €7.5 billion in 2016, of which €6.4 billion were related to the emissions test rigging scandal. Analysts had on average forecast the cost would be €4.2 billion in total.
Including those charges, VW made a 2016 operating profit of €7.1 billion, missing a consensus forecast of €10.5 billion but a big swing from a loss of €4.1 billion in 2015. VW’s chief executive Matthias Mueller said the carmaker was now well set for the years ahead. — Reuters