Volkswagen profit rises on US, Russia

A Volkswagen Beetle R is displayed during the Beijing International Automotive Exhibition in Beijing, China, Wednesday, April 25, 2012. (AP Photo/ Vincent Thian)

FRANKFURT - Sharply higher sales in the United States and a stronger foothold in Russia helped German carmaker Volkswagen AG beat market expectations for its first-quarter profits.

Net profit rose to €3.19 billion ($4.2 billion) from €1.71 billion in the same period the year before, the company said Thursday. Earnings were boosted by a much bigger profit on financial items that reflected the revaluing of share options related to the company's attempt to fully integrate sports car maker Porsche and its hedging against currency fluctuations.

Operating earnings — which exclude such financial complexities — rose 10 per cent to €3.2 billion, ahead of market analysts' expectations for €2.6 billion. Revenues were up 26 per cent to €47.33 billion on the year.

Volkswagen's luxury brand Audi saw stronger sales of its A6, A7 Sportback and A8 models, which contributed to an increase in the division's operating earning of 26 per cent to €1.4 billion. Volkswagen's brands include mass-market nameplates SEAT and Skoda as well as luxury businesses Bentley, Bugatti and Lamborghini as well as commercial vehicle makers Scania and MAN.

Volkswagen shares shot higher, trading up 6.2 per cent at €122.70.

The carmaker's business boomed in a stronger United States economy, where sales rose 34 per cent, and in Russia, where sales climbed 77 per cent to 66,000 vehicles.

CEO Martin Winterkorn confirmed the company's bullish outlook for rising sales in 2012 despite the uncertainties stemming from Europe's persistent sovereign debt crisis. "The results show that we are on the right road," he said in a statement.

The company's financial results swung from a loss of €0.7 billion last year to a plus of €1.1 billion, lifted by the value of currency hedging instruments, the Porsche options and Chinese joint ventures.

Volkswagen is trying to complete a merger with Porsche but integrating the sports car maker has been held up by legal issues. Share options held as part of the deal have meanwhile continued to affect the companies finances as their value is restated. Options worth €8.409 billion at the end of the year were revalued to €8.990 billion, the company said.