VW profit dips 86%, sees tough year-end

Written by Associated Press | Frankfurt | Updated: Oct 31 2009, 04:56am hrs
German carmaker Volkswagen AG said on Thursday net income for the third quarter plunged 86% as the global downturn affected demand for its cars and trucks.

Europes biggest automotive group by sales reported net income of euro172 million ($253 million), down from euro1.2 billion in the July-September period a year ago. VW, based in Wolfsburg, said sales for the quarter fell 10.3% to euro26 billion from euro29 billion in the third quarter of 2008.

The company said full year revenue would be lower than in 2008. Rising refinancing costs and the deterioration of sales for some brands would drag on the companys earnings. VW said it would attempt to counter the trend with cost and investment management and better efficiency.

VW said it would also continue to exploit opportunities on the market. Earlier this week, Volkswagen confirmed it was considering making an offer for bankrupt German contract automaker Karmann, which made the classic VW Karmann Ghia two-seater from the 1950s to the 1970s. Volkswagen, however, did not mention Karmann in its reports on Thursday.

The Volkswagen group is holding its own extremely well despite the adverse conditions, Martin Winterkorn, the chief executive said.

While the global market is contracting by 12%, we are recording stable delivery levels. This proves that - even in difficult times - we are well positioned with our multi-brand strategy.

Shares of VW were unchanged at euro110.24 in Frankfurt morning trading. Volkswagens brands include Audi, Lamborghini, Seat and Skoda. It recently started a merger process with Porsche AG and the company is also a major shareholder in MAN SE and Scania AB, two of Europes biggest truck builders. Nine-month net income fell 8% to euro719 million from euro3.8 billion in the same period of 2008. Group revenue fell nearly 10% to euro77.2 billion from euro85.4 billion in the January-September period of 2008.

The VW brand cars division saw revenue fall 16% to euro47.5 billion from euro56 billion in the first nine months. Revenue at Audi fell 15% to euro22 billion from euro26 billion in the January-September period of 2008.