Volkswagen Quarterly Earnings To Rise On Sales In China
26 Juillet 2010 - 1:57PM
Dow Jones News
German automaker Volkswagen AG (VOW.XE) on Thursday is expected
to report second-quarter net profit jumped to EUR733 million from
EUR283 million a year ago, fueled by its large footprint in the
dynamic Chinese market.
According to a Dow Jones Newswires survey of 13 analysts,
Volkswagen's pretax profit is expected to rise 47% year-on-year to
EUR1.11 billion from EUR751 million, while operating profit is
expected to show a 27% rise to EUR1.18 billion from EUR928 million.
Revenue is expected to increase 8.1% year-on-year to EUR29.4
billion from EUR27.2 billion.
"Due to very strong market environment for premium cars, we
expect Audi's performance to stand out in the quarter," Deutsche
Bank analyst Jochen Gehrke said in a recent note to clients. Gehrke
has a hold rating on VW stock.
At the core VW brand, Gehrke expects healthy profit in Brazil to
help shrug off anemic demand on the company's home turf in Germany,
where car sales deteriorated following the end of the country's
scrapping incentives that encouraged motorists to trade in aging
cars and buy new.
Investors will focus on the outlook for the second half of the
year as well, a possible update on the planned merger with Porsche
Automobil Holding SE (PAH3.XE) and any indication about progress in
forging a heavy-truck alliance between Scania AB (SCV-A.SK) and MAN
SE (MAN.XE).
Volkswagen holds a majority stake in Sweden-based Scania and is
the largest shareholder at German engineering company MAN with a
29.9% stake.
Volkswagen's second-quarter earnings are expected to underscore
a broad recovery in the automotive industry after a woeful 2009,
when demand for cars and trucks contracted sharply amid tight
credit markets and a jittery economic environment.
Volkswagen emerged relatively unscathed from the industry gloom
compared to most its rivals, thanks partly to its strong presence
in China and a small exposure to the U.S. market.
But some analysts have cautioned that the enormous growth seen
in China in recent months might start to slow and that the recent
recovery in the U.S. appears fragile.
On Friday, Europe's largest automaker by sales reported a 16%
rise year-on-year in vehicle sales in the January-to-June period to
3.58 million cars and trucks. "We are ... optimistic as regards the
full year," Volkswagen sales chief Christian Klingler said at the
time, but he noted that the first-half results couldn't be
extrapolated for the full year as the economic situation remains
uncertain.
Volkswagen Chief Executive Martin Winterkorn told reporters last
month that the Wolfsburg-based company expects vehicle sales growth
in 2010 to outpace an increase of about 5% in the global auto
market.
On June 16, Volkswagen lifted its full-year outlook and said
vehicle sales in 2010 are expected to rise significantly from 6.3
million in 2009 and operating profit is expected to climb from
EUR1.9 billion last year.
Favorable exchange rates are expected to bolster earnings,
particularly the relative weakness of the euro against the dollar.
Volkswagen exports many cars from Europe to the U.S., which lowered
earnings in recent years when the euro was stronger.
Volkswagen currently is building a new plant in Chattanooga,
Tenn., and is considering building a new engine plant in Mexico as
part of a wider effort to turn around its North American operations
and increase local production to reduce the exposure to currency
fluctuations.
Returning its North American business to profitability is a
cornerstone of the company's ambitious global expansion plan in
coming years, which include dethroning Toyota Motor Corp. (7203.TO)
as the world's largest automaker.
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com
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