Published On: Tue, May 31st, 2016

Volkswagen Net Profit Drops 20%, CEO Says Satisfied With Results

Volkswagen

Volkswagen saw profits drop following on from its widespread emissions scandal.

German auto giant, Volkswagen, announced a fall of 20% in its net profit during the quarter compared to the same period last year, following the groups emissions scandal. During last year Volkswagen admitted that it had installed its cars with software that could detect an emissions test and give false results to cheat mainly US tests.

The largest automaker in Europe struck a deal with the US Department of Justice to buyback or repair of over 500,000 cars with the, “defeat-device”, emission cheating software. Final details are expected in June. VW has now reserved more than €16 billion to patch up the scandal.

“In the first quarter, we once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions,” said Chief Executive Matthias Müller.

VW reported a 20% fall compared to the same period in 2015 with profits hitting €2.31 billion in the first quarter this year compared to €2.89 billion last year. Analysts had forecasted a 15% drop in net profit to €2.45 billion. Revenue fell by 3.4% to €50.96 billion.

Müller said:

“In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016.”

The Group, forecasted a 5% fall in 2016 sales revenue from last year, “depending on economic conditions – particularly in South America and Russia – and exchange rate developments as well as against the backdrop of the diesel issue,” however, “a marked decrease in sales revenue” in 2016 for its passenger cars including Audi, Seat and Skoda.

The company’s car sales are recovering, backed by its performance in China and Europe. VW sold 2.51 million vehicles worldwide, with Western Europe and China accounting for over 1.85 million, in the first quarter, above that of Toyota’s figure with 2.46 million vehicles sold worldwide.

Mueller added:

“2016 will be a transitional year for Volkswagen… we remain confident that our operating business will again record solid growth this year”

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