Profit beat wins VW respite after boardroom clash
By Andreas Cremer
BERLIN (Reuters) - Cost cutting and an improving European car market helped Volkswagen (VOWG_p.DE: Quote) post higher-than-expected profit in the first quarter, easing the pressure on management following the shock ouster of long-standing chairman Ferdinand Piech.
Four days after Piech quit in a showdown with his chief executive, Europe's largest automaker reported a 17 percent rise in operating profit and the first quarterly increase in earnings for seven years at Spanish division Seat.
Operating profit reached 3.33 billion euros ($3.65 billion), Volkswagen (VW) said on Wednesday, close to the top end of forecasts in a Reuters poll of analysts and well above the average estimate of 3.12 billion euros.
With Piech raising question marks about CEO Martin Winterkorn's ability to drive through improvements at VW, analysts were particularly relieved by signs of progress with the group's modular production strategy which aims to use a core range of components across a wide variety of models.
"These are good numbers," Bankhaus Metzler's Juergen Pieper said. "The modular production strategy is progressing and tailwinds may grow over the course of the year," he said, citing positive currency effects and cost savings at the core VW brand.
Earnings were boosted by a strengthening economic recovery in Europe -- destination of 40 percent of the group's auto sales -- and by progress in the VW brand's drive to cut costs by 5 billion euros a year by 2017.
Porsche, accounting for almost a quarter of group earnings, on Wednesday raised its profit guidance after posting better-than-expected results, citing favorable currency moves.
The yuan's strength against the euro helped profit to surge 29 percent at VW's two joint ventures in China, its biggest market, even though group sales only edged up 2 percent, finance chief Hans Dieter Poetsch said on a conference call. Continued...