Diesel Payments Cut VW Group’s Net Earnings 51%

Volkswagen AG says the cost of repairing or replacing diesels in the U.S. slashed its third-quarter net earnings to €1.1 billion ($1.3 billion) from €2.3 billion in the same period last year.

But when those charges are ignored, pretax earnings in July-September jumped 15% to €4.3 billion ($5 billion), beating forecasts. Analysts are gushing over the company’s rebound from its two-year old diesel emission cheating scandal.

Sales volume in the third quarter climbed 6% to 2.65 million vehicles, and revenue rose 6% to €55 billion ($63.8 billion) in July-September. Through the first nine months of 2017, group operating profit before special items advanced 17% to €13.2 billion ($15.3 billion).

Those results were tempered by another €2.6 billion charge booked in the third quarter for diesel remediation in the U.S. for about 555,000 diesels VW had rigged to evade emission laws. Such charges now total €25.1 billion ($29.1 billion) and include a payout so far this year of €14.5 billion ($16.8 billion).

When special charges are ignored, operating profits for VW brand operations doubled to €2.5 billion through the first nine months of 2017. Operating profits for the group’s SEAT and Skoda brands jumped 12% and 28%, respectively. Operating profits rose 4% for Porsche but were flat for Audi.

VW reiterates that it expects its full-year revenue will grow more than 4% to surpass last year’s €217 billion. But the group now forecasts its operating return on sales in 2017 will be “moderately higher” than the previous guidance of 6%-7%.