VOLKSWAGEN, THE world’s second-largest car maker, posted an unexpected drop in fourth-quarter operating profit as its stock of unsold vehicles nearly doubled, ending an otherwise bumper year on a downbeat note.
Based on preliminary annual results, quarterly operating profit slipped nearly 1 per cent to €2.29 billion, echoing a weakening of European demand already detected by other car makers.
Thanks in part to one-off gains on derivatives, full-year net profit more than doubled to €15.8 billion, VW said, one of the highest annual profits ever reported by a German company.
Earnings were published earlier than expected after a German newspaper reported VW’s preliminary figures. Detailed results for the full year and an outlook for 2012 will be published at its annual news conference on March 12th.
Sales chief Christian Klingler said earlier this month that the year would be “challenging” thanks to a European car market that experts say will shrink some 5 per cent to a new decade low.
Europe’s second largest car maker PSA Peugeot Citroen swung to an annual loss and refrained from giving any profit guidance, apart from its pledge to sell assets and cut more costs to repair its balance sheet.
The French rival is in alliance talks with General Motors loss-making German unit Opel to be more competitive in Europe, where Volkswagen is less exposed, because it sells one in four of its cars in China.
Credit Suisse analyst Arndt Ellinghorst said he doubted VW would be able to improve earnings this year without help from its newest subsidiary, German truckmaker MAN, in which it gained a majority stake in November.
“Operating profit will likely only rise this year thanks to the consolidation of MAN’s results,” he said.
Car production at VW outstripped deliveries by nearly 100,000 in the final quarter.
This would not normally be a concern but deliveries in China fell nearly 5 per cent in January, which VW ascribed to a Chinese lunar New Year festival.
While most analysts expect car sales to rebound this month, data this week showed activity in China’s manufacturing sector will probably shrink in February for the fourth month. – (Reuters)
