April 29, 2014 / 9:59 AM / 5 years ago

VW profit jumps as Audi, Porsche sales hit record

The Volkswagen logo is displayed on a 2014 Beetle TDI during the North American International Auto Show in Detroit, Michigan January 15, 2014. REUTERS/Joshua Lott

BERLIN (Reuters) - German carmaker Volkswagen (VOWG_p.DE) posted a quarterly jump in operating profit as Europea’s fledgling economic recovery lifted sales of Audi and Porsche luxury models to record levels.

First-quarter underlying earnings at Europe’s biggest carmaker gained 22 percent to 2.9 billion euros ($4 billion), compared with 2.3 billion a year ago, VW said on Tuesday.

That beat the average estimate of 2.74 billion euros in a Reuters poll of analysts and was just short of the highest forecast of 3.05 billion euros.

But VW stuck to the cautious outlook it published in February, even though core European markets that account for 40 percent of group sales have increased volumes for seven straight months.

Rebounding demand in Europe helped VW’s luxury Audi brand and sports-car maker Porsche to boost first-quarter deliveries by 11.7 percent and 4.5 percent respectively to 413,000 and 38,700.

VW’s group operating margin may be broadly flat this year, coming in a range of 5.5 percent to 6.5 percent, after 5.9 percent last year, VW said, reiterating its February 21 statement.

That compares with 2013 car division margins of 8.8 percent at Toyota (7203.T) and 9 percent at Hyundai (005380.KS).

VW’s year-on-year improvement was also boosted by 350 million euros of provisions at VW’s engineering division MAN SE (MANG.DE) for a failed power plant project and the cost of an overseas vehicle recall, analysts said.

VW expects to increase group deliveries slightly from last year’s record 9.7 million vehicles and sales to move within a range of 3 percent around last year’s 197 billion euros. ($1 = 0.7223 Euros)

Reporting by Andreas Cremer; Editing by David Goodman

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