Economy

VW ups profit forecast for group

Volkswagen AG reported a steep drop in third-quarter net profit Friday, hit by costs related to its diesel emissions scandal.

"For this we are thankful", said Matthias Müller, chairman of the Board of Management of the Volkswagen Group.

Volkswagen, the German carmaker, reported a fall in third-quarter earnings on Friday after the company incurred costs related to the fix of diesel cars caught up in the emissions scandal. "This is a strong foundation we can build on". Operating profit before special items grew 15.1 percent to 4.32 billion euros from 3.75 billion euros past year. That beat even the highest estimate of 4.17 billion in a Reuters poll of banks and brokerages. VW said it booked ¤2.6bn in the three months ended September 30 to fix diesel engines in the United States, confirming an announcement made last month that it will raise total provisions for its "Dieselgate" scandal to ¤25.1bn. Vehicle sales grew 7.7 percent to 2.64 million units.

VW shares gained 2.58 percent to trade at 149.25 euros by 0730 GMT, outperforming the DAX index of blue-chip German shares, up 0.7 percent.

In terms of the operating profit before special items, it is estimated that the operating return on sales in 2017 will be moderately higher than the original target of between 6.0 and 7.0 percent.

Analysts said that today's results show that customers at least overseas are ready to forgive VW the diesel scandal.

It has also ceased unprofitable models, reduced parts complexities and streamlined model development to lift the brand margin to at least 4% by 2020 and 6% by 2025, after 1.8% past year.

VW's core brand is in the midst of cutting thousands of jobs through natural attrition, has ceased unprofitable models, reduced parts complexities and streamlined model development to lift the core division's margins. Volkswagen also confirmed its revenue guidance for 2017. Surprisingly, VW's future looks rosier.

Sales revenue grew significantly year-on-year to $199.7 billion through September, according to the company that has an assembly plant in Chattanooga.



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