Frankfurt, Germany: Automaker Volkswagen AG saw profits slip in the second quarter despite taking the global lead in sales over Toyota and GM.
The Wolfsburg, Germany-based automaker was hit by €180 million ($198 million; Dh731.2 million) in restructuring costs at its MAN truck division. More broadly, it faces headwinds from troubled economies in China, Russia and Brazil.
Profit after tax fell to €2.73 billion from €3.25 billion in the prior-year quarter. Revenues rose 9.9 per cent to €56.04 billion, largely boosted by favourable exchange rate changes.
CEO Martin Winterkorn warned against becoming complacent over the sales lead, saying that “size is not an end in itself.”
Volkswagen said on Wednesday that earnings from joint ventures with Chinese automakers were roughly flat over the first half of the year. China has been a key source of sales growth for Germany car makers but economic growth there has been slowing. VW sales in China fell by 0.5 per cent in the first half of the year.
Along with other automakers, Volkswagen faces plunging demand in Russia, where the fall in the rouble has hit consumers hard.
Volkswagen sold 5.04 million vehicles in the first half of the year, edging past Toyota which had 5.02 million and General Motors with 4.86 million.
“Volkswagen remains very well positioned in an increasingly difficult market environment” and was keeping a “close watch” on global economic trends, Winterkorn said in a statement.
He was quoted by the Bild newspaper as cautioning the company’s employees against seeing the sales volume title as the company’s main goal.
“We also want to be in the champion’s league in productivity and profit,” Bild quoted him as saying.
Beyond that, having satisfied customers and employees was the target. “Only then have we reached our goal,” he said.
Volkswagen stock fell 2 per cent to €186.75 in morning trading in Europe.
