Volkswagen Posts 51% Slide in Profit Despite Firmer Sales

WOLFSBURG, Germany October 30,2002 Dow Jones reported that Volkswagen AG Wednesday said third-quarter net profit slumped 51% despite a small rise in sales, but the German auto maker stuck to its full-year profit target.

VW -- Europe's biggest auto maker -- posted a net profit of 439 million euros ($432.4 million) for the latest quarter, down from 903 million euros in the same period a year earlier. Sales rose 2.2% to 21.21 billion euros from 20.76 billion euros.

The company said the profit decline was caused partly by a one-off gain that boosted third-quarter earnings a year ago by 200 million euros. It said also that the value of its investments tumbled and that unfavorable foreign-exchange rates and higher warranty and start-up costs took their toll.

Analysts had forecast net profit to fall 37% to 570 million euros. Third- quarter sales slightly surpassed analysts' expectations of 20.95 billion euros.

VW said the slight upward trend in the world economy in the first half of the year wasn't sustained in the third quarter. "The combination of existing overcapacities, increasing raw-material prices and further declining equity markets had a particularly subduing effect," VW said.

But the company said it is confident it can meet its target for a full-year pretax profit of around four billion euros, down from 4.41 billion euros in 2001. It also still expects vehicle sales to fall to just below five million in this year from 5.08 million last year.