FRANKFURT–Volkswagen AG’s (VOW.XE) net profit rose in the second quarter, fueled by increased sales and further distancing the German car maker from losses related to an emissions-cheating scandal that erupted in 2015.
Second-quarter net profit was 3.19 billion euros ($3.72 billion) compared with EUR1.21 billion a year earlier, the auto maker said. Sales were up 4.7% at EUR58.67 billion.
Net cash outflows in the automotive division were EUR3.4 billion, largely due to payouts related to the diesel emissions scandal. The scandal has cost the company around $25 billion in fines, penalties and compensation so far.
Volkswagen tweaked its guidance for full-year sales, saying it expects them to rise by more than 4% compared with the “up to” 4% forecast previously.
Some analysts were disappointed that Volkswagen didn’t raise its full-year forecast for operating margins of between 6% and 7%. Evercore ISI analyst Arndt Ellinghorst said the company is likely to raise its forecast alongside third-quarter figures, after achieving 7.6% mid-year.
Profit during the first half of the year more than doubled to EUR1.78 billion from EUR881 million a year earlier.
Volkswagen didn’t comment on fresh allegations of collusion with other car makers on prices, technology and suppliers, which are weighing on the stock. At midday, Volkswagen shares were down 1.8% at EUR134.15.
In September 2015 Volkswagen admitted to rigging millions of diesel cars with software to cheat emissions tests, sparking the worst crisis in the firm’s 80-year history. The scandal has cost the firm around $25 billion in fines, penalties and compensation to dealers and customers.
Sales took a nose dive at the end of 2015 and the company reported its worst ever loss. Full-year sales in the U.S. fell almost 8% in 2016, but have grown again this year. In May, the company said it expected to break even in the U.S. market by 2020, the first time in years.
Volkswagen booked the expected charges in 2015 and 2016, meaning the cost shows up in its cash balance rather than its profit. Frank Witter, the company’s finance chief, has forecast cash outflows in “the double-digit billion euro range” this year.
Volkswagen said late last year it would cut 30,000 jobs in coming years as part of a push to narrow the gap with more profitable rivals, Toyota Motor Corp.
and General Motors Co.
Deep cuts are also needed to boost profit so that Volkswagen can invest in electric cars, digitization and self-driving car technology, the company said.
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