Profit outlook lifted at VW as third-quarter earnings rise
Impact of dieselgate starting to ease at German car maker
Volkswagen logo. Photograph: Epa/Focke Strangmann
Car maker Volkswagen lifted its 2017 earnings forecast on robust demand for its vehicles such as the Tiguan SUV, even as the rising costs of the diesel-cheating scandal hit third-quarter profit.
The operating margin this year is now projected to “moderately” exceed a previous forecast of between 6 and 7 per cent, Volkswagen said in a statement. Revenue is still expected to grow by more than 4 per cent. The shares rose to their highest since January.
“The company is showing remarkable resilience, and the headwinds from ‘dieselgate’ are slowly starting to ease,” said Jürgen Pieper, a Frankfurt-based analyst with Metzler Bank.
The company generated €1.85 billion in cash in the third quarter.
Operating profit, including costs related to the emissions scandal, dropped 48 per cent to €1.72 billion. Volkswagen announced last month that it would take a surprise charge of about €2.5 billion in the period, bringing total damages from the two-year-old crisis to over €25 billion.
VW anticipates another roughly €2.5 billion cash outflow related to the diesel scandal in the fourth quarter, followed by a charge of between €4.5 billion and and €5 billion next year. – Bloomberg