VW Boosts Operating Earnings 3%

Volkswagen AG hiked operating profit to €3.3 billion in the second quarter of this year from to €3.2 billion in the same period of 2011. Operating margin narrowed to 6.8% from 7.9% year over year.

VW says investment in new vehicles and intensifying price pressure in Europe offset some of its gains from stronger sales. Revenue soared 19% to €48.1 billion as global volume climbed 13% to 2.39 million vehicles.

Net income surged 20% year over year to €5.6 billion in the April-June period, boosted in part by a higher valuation of the company's Porsche AG options. VW's Chinese joint ventures, which are not included in operating results, contributed €930 million to consolidated earnings.

The company doesn't report quarterly results by brand or region. In the first half, Audi outshone the VW brand with €2.9 billion in operating profit and a robust 11.6% return on sales. The VW passenger car unit posted income of €2.2 billion and only a 4.2% margin.

Volkswagen Group increased revenue in all regions in the first six months of 2012, including Europe (14% to €59.2 billion) Asia Pacific (56% to €16.3 billion), North America (37% to €11.3 billion) and South America (22% to €8.6 billion).

The company stands by its earlier full-year forecast that operating earnings will match last year's record €11.3 billion, citing strong demand in China and the U.S. But analysts tell Bloomberg News that VW's vehicle sales growth could slow to 5% in the second half of this year from 10% in the first six months.