Volkswagen's Full-Year Net Profit Drops 31 Percent in 2004 As It Battles Weak Dollar

BERLIN February 14, 2005; The AP reported that Volkswagen AG saw full-year net profit fall 31 percent in 2004, the company said Monday, as the automaker fought headwinds from the weak dollar and sluggish consumer spending in Germany.

Net income dropped to 677 million euros ($838.80) from 980 million euros in 2003, the company said, on sales that rose 4.9 percent to 88.96 billion euros ($110.6 billion).

Despite the dip in profit, the Wolfsburg-based company said it had met its target for operating earnings and would keep its dividend unchanged at 1.05 euros ($1.31) per ordinary share.

Operating earnings fell 12 percent to 2.0 billion euros ($2.5 billion) from 2.3 billion euros, but exceeded the company's forecast of 1.9 billion euros ($2.4 billion).

The weakening dollar squeezed Volkswagen's profit margins in the U.S. market, where the company also faces fierce price competition from General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's U.S. Chrysler Group. At home, German consumers remained reluctant to spend money even as the economy enters a moderate recovery.