Volkswagen said today its core profits had fallen by more than half in the second quarter as a strong euro, new product costs and slumping demand took their toll.
Europe's biggest car maker said its operating profit fell to €616 million in the three months to the end of June - from €1.4 billion a year ago. Its pre-tax profit fell to €679 million - a narrower decline than analysts had expected.
The company said its financial result, which feeds into pre-tax profit, was boosted by strong contributions from joint ventures and write-ups on equity investments.
Volkswagen stock, which has recovered from the seven-year lows it plumbed in March, when the company first warned operating profit would fall this year, was up 1.8 per cent at €36.95 this morning, outperforming European peers.
The company said earnings should improve in the second half as its recently launched Touran and Touareg, as well as the forthcoming fifth-generation Golf, buoy sales, although it said profits in the year as a whole would be significantly lower.
Like its rivals, VW has been battling with shrinking auto markets in Europe and the United States, but it is further saddled by the cost of a massive product overhaul.
French peer PSA Peugeot Citroen, Europe's second-biggest carmaker, also posted a sharp slide in first-half profits on Thursday and cut its full-year forecasts.