VW sees huge income drop as fewer cars sold

• Source: Shanghai Daily
• [07:56 July 31 2009]
• Comments

German auto maker Volkswagen AG said yesterday that its second-quarter net profit plummeted 83 percent on lower sales of its cars - from Audis to Skodas - as consumers around the world put off big purchases during the recession.

The Wolfsburg-based auto maker, currently in talks to merge with Porsche SE, said it earned 283 million euros (US$399.14 million) in the April-June period compared with 1.6 billion euros a year earlier.

Sales were down 7.7 percent to 27.2 billion euros in the quarter compared with 29.4 billion euros last year.

Despite the drops, investors sent VW shares up 4.5 percent to 252.70 euros in Frankfurt trading, encouraged by a 4.3 billion euro increase in net liquidity to 12.3 billion euros.

"Preserving our financial flexibility is a top priority," Chief Financial Officer Hans Dieter Poetsch said. "At the same time, we are investing in renewing and expanding our forward-looking product portfolio."

In the first six months of the year, VW said its net profit slid nearly 81 percent to 494 million euros compared with 2.5 billion euros in the first six months of 2008.

VW, whose brands also include Seat, Bentley and Lamborghini, said sales from January to June declined 9.4 percent to 51.2 billion euros compared with 56.5 billion euros last year.

The company did not offer a resolute forecast for the rest of the year, citing what it called the "high volatility of market developments," but did say that it does not expect its earnings to reach the level of previous years.

In 2008 it earned 4.8 billion euros on sales of 114 billion euros.