VW Regains Profit, Raises Outlook

Volkswagen Group posted a €2.3 billion ($2.5 billion) net profit in the third quarter, reversing last year’s €1.7 billion loss on charges related to its diesel emission cheating scandal.

Third-quarter operating profit swung to €3.3 billion ($3.6 billion) from a €3.5 billion loss last year. The improvement came in spite of a new €400 million ($437 million) charge related to VW’s diesel problems.

Revenue for the three-month period rose 1% to €52 billion ($56.8 billion) as unit retail deliveries gained 4% to 2.49 million vehicles.

The group now expects its full-year vehicle deliveries and sales revenue will equal last year’s totals, an improvement from the 5% decline it predicted earlier. The company also says its operating return on sales will be at the upper end of its previous forecast range of 5%-6%.

Group operating profit through the first nine months of 2016 jumped to €8.6 billion from €3.3 billion, and net income surged 48% to €5.9 billion. Vehicle deliveries rose 3% to 7.65 million vehicles. But a less favorable product mix left revenue flat at €160 billion ($175 billion).

Results in January-September were bolstered by big operating profit gains for Skoda (+28% to €940 million), SEAT (+10% to €137 million), Porsche (+12% to €2.9 billion) and VW Commercial Vehicles (+25% to €392 million).

But operating profit before special items for the company’s VW brand shrank 45% to €1.2 billion ($1.3 billion), including a drop to €363 million ($396 million) from €801 million in the third quarter. The brand’s unit sales in January-September slipped 3% to 3.2 million cars and crossover vehicles.