Volkswagen profits tumble as emissions scandal takes toll
- Credit: PA
Volkswagen saw profits tumble by nearly a fifth at the start of 2016 as it continued to grapple with the fall-out from its global emissions scandal.
The group posted a 19.3% drop in pre-tax profits to 3.2bn euros (£2.4bn) for the three months to the end of March, with revenues down 3.4%.
But chief executive Matthias Mueller insisted it was a “respectable” result, with operating profits edging 3.4% higher to 3.4bn euros (£2.6bn) from 3.3bn euros (£2.5bn) a year earlier, boosted by one-off effects.
He said: “In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016.
“We once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions.”
Volkswagen faces heavy costs for recalls and fixes to cars with engine-control software that evaded emissions tests.
The company has already earmarked £12.7bn to cover recalls and other costs for 11m cars sold with the software globally.
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The group’s operating profits rose thanks in part to 300m euros (£229m) of currency gains on provisions put by to pay for its diesel emissions scandal.
Its first-quarter results revealed plummeting sales in Russia and Brazil due to economic woes, with revenues down 35% and 17% respectively.
Earnings slipped for its Audi brand to 1.3bn euros (£99m) from 1.4bn euros (£1.1bn) a year earlier, but its Porsche business delivered a 14% rise in underlying operating profits to 895m euros (£683m).
Volkswagen, based in Wolfsburg, Germany, confirmed previous guidance for the full year, with the group expecting sales to drop by up to 5% this year.
The company has reached a tentative agreement over its emissions scandal in federal court in San Francisco with US authorities to buy back or repair around 500,000 vehicles.
Volkswagen, the US Department of Justice and attorneys for Volkswagen owners have until June 21 to file a final settlement with the court.
The Volkswagen Group has a 12.3% share of the world’s car market, with 12 brands from seven European countries - Volkswagen Passenger Cars, Audi, SEAT, Skoda, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN.