VW profit tops forecast, but takes another €2.2bn dieselgate hit

Volkswagen said on Wednesday its first-half operating profit beat expectations, helped by cost cutting at its core VW brand and rising European car sales, but announced another €2.2 billion provision related to its emissions scandal.

Europe’s biggest carmaker said its operating profit for the six months ended June, excluding one-off items, rose 7 per cent to €7.5 billion.

In an unscheduled update ahead of interim results on July 28th, it said this was ahead of analysts’ expectations, although it did not say what those expectations were.

Volkswagen (VW) shares were up 5.1 per cent at €122.35 in early trading on Wednesday.

Including the one-off items, however, VW said its operating profit dropped 22 per cent to €5.3 billion.

VW admitted in September it installed illegal software that deactivated pollution controls on more than 11 million diesel vehicles worldwide, sparking the biggest business crisis in its history.

It has already set aside €16.2 billion to pay for technical fixes for cars that violate clean air standards, buybacks of vehicles and legal costs.

VW said an improvement in European car markets as well as the return of orders from large corporate fleets had bolstered earnings at its namesake brand.

The company said it still expected 2016 sales revenue to decline as much as 5 per cent from 2015, and an operating return on sales of 5 to 6 per cent.

Reuters