By Christoph Rauwald
Volkswagen /zigman2/quotes/206736865/delayed DE:VOW +1.25% AG said its luxury-brand unit Audi /zigman2/quotes/207972355/delayed DE:NSU +0.63% AG and its business in China helped fuel a stronger-than-expected surge in third-quarter earnings, but the German auto maker cautioned that growth will slow in the fourth quarter.
The largest European car maker said that third-quarter net profit rose to €2.1 billion ($2.9 billion) from €172 million the year before, while quarterly sales revenue jumped 18% to €30.74 billion from €25.96 billion the year before.
In a more detailed report of preliminary nine-month earnings figures released last week, Volkswagen said that growth at Audi had contributed nearly half of Volkswagen's overall operating profit for the first nine months of the year.
Volkswagen's nine-month operating profit more than tripled to €4.8 billion, up from €1.5 billion a year ago, with Audi's operating profit nearly doubling to €2.27 billion.
Volkswagen's two Chinese joint ventures generated €1.3 billion in operating profit in the first nine months, compared with €500 million a year earlier. The company said the number wasn't included in the group's operating earnings figure because of the way Chinese operations are accounted for.
Net liquidity rose to €19.6 billion from €13.4 billion last year, which analysts view as evidence that Volkswagen has sufficient muscle to easily finance its ambitious global expansion plan.
Volkswagen already plans to complete the integration of Porsche Automobil Holding SE's sports car unit as its 10th auto brand, and the company is widely expected to increase its holdings in German truck maker MAN /zigman2/quotes/200637338/composite MAN +0.62% SE and Japanese car maker Suzuki Motor /zigman2/quotes/201794956/delayed JP:7269 +0.82% Corp. at some point.
VW said its main VW passenger-car brand, its Czech unit Skoda and its financial-services unit had also produced higher earnings, though its Spanish brand Seat and its Bentley unit suffered further losses.
The VW brand contributed €1.55 billion to earnings in the first nine months, up from €335 million a year ago, while Skoda's nine-month operating profit roughly doubled to €314 million from €162 million in 2009. The financial-services unit posted an operating profit of €684 million, up from €468 million.
Losses at troubled Spanish brand Seat barely narrowed to €218 million, while VW's ultra-luxury Bentley brand reported a nearly unchanged loss of €145 million.
Despite its better-than-expected third-quarter results, VW reiterated that business wouldn't grow at the same pace in the fourth quarter. "Nevertheless, we believe that sales revenue and operating profit in the current year will continue to perform positively," Volkswagen Chief Financial Officer Hans Dieter Poetsch said in a statement.
Mr. Poetsch also said favorable exchange-rate effects will provide a significant boost to Volkswagen's fourth-quarter operating profit. The tailwind through favorable exchange rates will be stronger than in previous quarters this year, he said during a telephone conference with analysts and journalists.
Favorable exchange rates contributed around €100 million to the auto maker's first-quarter operating profit, €300 million in the second quarter and €200 million in the third quarter.