FRANKFURT: Europe’s biggest carmaker, Volkswagen AG (VW), said yesterday its core profit had fallen by more than half in the second quarter as a strong euro, new product costs and slumping demand took their toll.
VW said its operating profit had fallen to 616 million euros (US$708mil) for the three months to the end of June from 1.4 billion euros a year ago. Its pre-tax profit dropped to 679 million – a smaller 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.
VW expects earnings to 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 profit for 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. – Reuters