Volkswagen posts big profit surge

Volkswagen might have lost some sales in the first quarter of this year, but it won’t be too concerned – announcing this week that its operating profit has leapt 40 per cent.

The German brand dropped a lazy €23 billion ($AU33 billion) on the worst of the clean-up from its ‘Dieselgate’ scandal. However, now it’s clearly back to making money, with an operating profit of €4.37 billion ($AU6.41 billion), up from €3.13 billion ($AU4.59 billion) in the first quarter of 2016.

Volkswagen said in a statement that it largely boosted its profit thanks to cost savings at its namesake brand, with the Volkswagen Group’s operating margin still on target to come in at between 6 and 7 per cent for the full year.

While its 2016 operating margin was 6.7 per cent, largely on the back of huge margins from Porsche and Audi, its first quarter operating profit jumped up to 7.8 per cent while the Group’s revenues climbed to €56.2 billion ($AU82.4 billion), up by 10.3 per cent.

"Our efforts to improve efficiency and productivity across all areas of the company are paying off," Volkswagen Group CEO Matthias Mueller said.

The Volkswagen brand saw its earnings climb €73 million to €869 million, while Bentley slowed its losses to only €30 million and perennial cash machine Audi saw its profit slide from €1.3 billion to €1.2 billion.

On the plus side, Porsche remained strong (€832 million in profit) and both Skoda and Seat have been surging, with Seat’s profit jumping 56 per cent to €54 million after years of losses and Skoda’s profit climbing 32 per cent to €415 million.

Beyond 2017
Volkswagen has ambitious plans for its core brand, aiming to climb through a 4 per cent operating margin by 2020 and 6 per cent by 2025, both of which would be a handy boost from its 2016 margin of 1.8 per cent.

Porsche leads the Group in profitability, with an 18.5 per cent operating margin, followed by Skoda at 9.6 per cent, Audi at 8.7 per cent, Volkswagen with 4.6 per cent and Seat at 2.3 per cent.