By Christoph Rauwald
FRANKFURT—Volkswagen /zigman2/quotes/206736865/delayed DE:VOW +0.34% AG posted a sharply higher second-quarter net profit on Thursday thanks to higher vehicle sales and weak euro, which boosted revenues earned abroad.
"We were able to expand our position in the international automotive markets even further. We shall systematically extend our competitive position on the way to becoming the world's leading automaker," Volkswagen Chief Executive Martin Winterkorn said in a statement.
Volkswagen, with a stable of brands that includes Audi /zigman2/quotes/207972355/delayed DE:NSU +0.63% AG, Skoda, Seat and Bentley, as well as its own VW brand, has recently stated that it wants to overtake Toyota Motor Co. to become the world's biggest auto maker.
Net profit jumped to €1.25 billion ($1.62 billion) for the three months ended June 30, from €283 million a year earlier, when car sales collapsed amid the global economic crisis. Revenue rose to €33.2 billion from €27.2 billion.
Favorable exchange rates had a positive impact on Volkswagen's profit. With the euro weaker against the dollar, earnings generated in the U.S. were inflated when converted into the common currency. The Chinese Renminbi is also effectively still tied to the dollar.
VW's Chinese operations, which are consolidated at equity and thus aren't included in the company's operating profit figure, earned the equivalent of €802 million in the first half of the year.
The Audi premium brand remained VW's biggest earnings contributor with €1.33 billion operating profit in the first six months compared with €823 million in the prior-year period. Audi has closed the gap on the world's two largest premium auto makers, BMW AG and Daimler AG, posting sales gains for most of the last 10 years.
Operating profit at the core VW brand rose to €1.03 billion from €216 million last year, while first-half losses at the Spanish Seat brand and the Bentley marque narrowed slightly to €157 million from €159 million and €109 million from €114 million, respectively. VW doesn't release second-quarter results for its different divisions.
Net liquidity in Volkswagen's automotive division soared 42% to €17.5 billion at the end of the second quarter from €12.3 billion last year.
VW holds a 29.9% stake in German truck maker MAN /zigman2/quotes/202395595/delayed DE:MAN +2.30% SE and speculation has been swirling for months that it might raise its stake to help foster cooperation with VW's own Swedish truck maker, Scania. VW also bought a 49.9% stake in Porsche Automobil Holding SE's sports-car unit last year and plans to complete a complex merger with the holding firm in 2011.
Volkswagen's earnings underscore a broad recovery in the automotive industry after a gloomy 2009, when demand for cars and trucks contracted sharply amid tight credit markets and a jittery economic environment.
But Europe's largest auto maker by sales emerged relatively unscathed from the industry gloom compared to most rivals, thanks partly to its strong presence in China, a small exposure to the U.S. market and a revival in demand in Germany last year as a result of state-backed scrapping incentives.
Volkswagen, however, reiterated previous statements that the dynamic growth experienced in the first six months "will not continue undiminished in the second half of the year."
Volkswagen posted a 16% annual rise in vehicle deliveries in the January-to to June period to 3.61 million cars and trucks. Some analysts have cautioned that the enormous growth in China in recent months might start to slow, and that the recent recovery in the U.S. appears fragile. Additionally, the European market is heading for a downturn in coming months after the effects of various scrapping initiatives begin to wane.
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