At the turn of the coronavirus, Volkswagen profits fall less than expected

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In this news, we discuss the At the turn of the coronavirus, Volkswagen profits fall less than expected

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BERLIN / LONDON / FRANKFURT (Reuters) – Volkswagen’s profits nearly halved last year due to the impact of the pandemic, but a rebound in sales of premium cars in China and stronger deliveries to the fourth quarter helped keep the world’s largest automaker in the dark.

The group announced on Friday operating profit, excluding costs related to its diesel emissions scandal amounted to 10 billion euros ($ 12.2 billion), up from 19.3 billion in 2019.

Analysts were expecting operating profit of 4.8 billion euros, according to data from Refinitiv Eikon.

The net cash flow of its automotive division was around 6 billion euros and car deliveries increased towards the end of the year, the German group said in a statement.

“The scale of the pace is welcome and supports the coming annual results in the industry,” Jefferies analysts wrote in a note.

The performance crowns a turbulent 2020 for Volkswagen and the automotive industry. A pandemic-fueled drop in sales resulted in a loss in the second quarter before Volkswagen returned to profitability in the third quarter due to growing demand for luxury vehicles in China, the world’s largest auto market.

Volkswagen shares hit their highest level in 11 months after Friday’s earnings release. They are up 2.7% to 166.4 euros at the start of the afternoon.

Major shareholder Porsche Automobil Holding SE, which owns 31.4% of Volkswagen and 53.1% of the group’s voting rights, said it would likely record a significantly positive after-tax profit for 2020 thanks to Volkswagen’s performance.

Volkswagen’s truck manufacturing unit, Traton SE, also posted full-year adjusted operating profit of € 135 million, much better than a loss of € 625 million that analysts had predicted. Traton said sales had “continued to recover strongly in the fourth quarter”.

Volkswagen sales rose 1.7% in December, at a time when new car registrations in Europe fell nearly 4%, according to data from the European Automobile Manufacturers Association.

Volkswagen and its rivals still face challenges as a result of the pandemic, including a global shortage of chips needed for production and ongoing closures in various markets to tackle the outbreak, which means 2021 will be another year. difficult.

It also faces fierce competition in the development of electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot owner PSA to create the world’s fourth largest automaker, Stellantis, is adding to the pressure.

Volkswagen said on Thursday it missed the EU’s carbon dioxide (CO2) emission targets for its passenger car fleet last year and faced a fine of more than € 100 million.

The group is expected to release detailed 2020 figures on March 16.

Reporting by Kirsti Knolle, Nick Carey and Christoph Steitz; Edited by Maria Sheahan, Mark Potter and Susan Fenton

Original © Thomson Reuters

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