Volkswagen reports $6.86 billion profit in second quarter, still gives cautious outlook

Sales number for Volkswagen soared in the second quarter, with over three times the previous quarters net profit. The company, however, remains careful as they believe that the next few months may present new issues, and that the sales increase will most likely stop here.

The tally hit $6.86 billion this quarter, which is far above what the automaker was doing this time last year. Despite that upswing, shares are down 5.9 percent to $180, said to be due to warnings that the increases won’t stick for the future.

With only a slight increase in U.S. sales, new markets seem to be what brought on the increase, such as South Africa, China, Russia, and Argentina.

Analysts estimated that VW would bring in $4.5 billion this quarter on operating profit, where in reality they fell short, bringing in $4.4 billion.

Volkswagen sites their negative outlook for the future with potential causes like “Volatile interest-rate and exchange rate developments as well as raw materials prices could weaken the positive volume effects,”.

Other industries feel that their numbers will follow the same pattern, such as BASF SE, and Siemans AG.
Audi, Volkswagens luxury section, lead in profit margins, with a 12.9 percent margin, where the overall was 7.9 percent, up from the previous quarters 7.8 percent.

Max Warburthon, an Analyst from Sanford C. Bernstein notes that this is “a fundamentally lower return business” and says that the returns typically coincide with the market averages.

– By: Alexandra Koken

Source: Detroit News