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Fri, Jul 31, 2009 - Page 10 News List

Volkswagen in the black despite drop in first-half profit

AFP , FRANKFURT AND PARIS

Germany’s Volkswagen (VW), the biggest European carmaker, said yesterday that it managed to remain in the black despite an 81 percent plunge in its first-half net profit, but the outlook remains uncertain.

VW posted a net profit of 494 million euros (US$695 million), down from 2.57 billion euros in the same period a year earlier and below analyst forecasts of around 524 million euros.

Sales fell 9.4 percent in the six-month period to 51.2 billion euros, a statement said.

The group delivered a total of 3.1 vehicles, down 5 percent.

Business was “significantly affected by the global financial and economic crisis,” the company said.

OUTLOOK

VW maintained its outlook for this year but did not provide detailed figures, saying that “the high volatility of market developments does not permit any reliable forecasts to be made for the rest of fiscal year 2009.”

“Based on the extremely weak business in the first six months of 2009, we continue to expect that our earnings will not reach the level of previous years,” it said.

Operating profit in the six months to last month slumped 63.9 percent to 1.24 billion euros, but VW nonetheless continued to fare better than many rivals amid the collapse of global auto markets.

Meanwhile, French auto group Renault reported a first-half net loss of 2.71 billion euros as sales slumped 23.7 percent to 15.99 billion euros, but said the outlook was improving.

The loss figure contrasted with a net profit of 1.58 billion euros in the first half of last year.

Despite the loss, Renault, which controls the Japanese automaker Nissan Motor, maintained its forecasts for the year, expecting some parts of the market to recover from the global economic slump that has rocked the industry.

The company reported a big drop in its stocks of unsold vehicles, though they remained high.

GLOBAL SALES

Renault revised upwards its forecast global auto industry sales this year to more than 57 million vehicles, representing a fall of 12 percent from the figure last year compared with its previous estimate of a downturn of 15 percent.

In Europe, the market “should improve over the second half of the year to show a fall of eight percent,” compared with a drop of 13.7 percent in the first six months, the company said.

The group’s share of the global auto market was steady in the first half at 3.7 percent.

For the whole of the year, the company stood by its targets announced at the beginning of the year, of increasing its market share and achieving positive free cash flow, a reference to the rate at which the company earns cash compared with the rate at which the money is spent.

“Renault is holding up” against the slump, chief executive Carlos Ghosn said in a statement.

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