FRANKFURT – Automaker Volkswagen AG says net profit jumped 56 per cent in the third quarter as the company saw more sales growth in China and a slowly recovering European auto market.
The company reaffirmed its profit targets for the year but said Thursday that global auto markets would remain dominated by political and economic uncertainty.
Net profit rose to 2.97 billion euros ($3.8 billion) from 1.91 billion euros in the same quarter a year ago. Sales revenue rose 4.1 per cent to 48.9 billion euros ($62.4 billion).
Volkswagen saw a notable rebound in sales in its home market, Germany, where it sold 11.4 per cent more vehicles during the quarter. Over the first nine months of the year, VW has seen stronger sales in Germany and the UK, where the economy is doing better. Spanish sales have also benefited from a government purchase incentive program.
Sales in Russia have dropped during the conflict between Russia and Ukraine, while sales also lagged in Argentina and Brazil.
Chief Financial Officer Hans Dieter Poetsch gave a cautious assessment of the future, saying, “We expect that the markets will continue to see mixed trends in the remainder of the year. “
“This environment is dominated by political and economic uncertainty and demands maximum flexibility and financial strength on our part,” he added.
Analyst Max Warburton at Sanford C. Bernstein said the quarter was better than expected but cautioned that some of the increase in profits appeared to come from gains on foreign currency hedges rather than improved core business. He estimated the non-cash hedging gains at 400-to-500 million euros. Companies that do business in difference currencies often use currency hedges on financial markets to protect themselves from shifting exchange rates.
Volkswagen’s profits beat analyst expectations for 2.43 billion euros ($3.1 billion). Company shares rose 1.17 per cent on the day to 164.40 euros.