Volkswagen profit rises despite emissions certification woes

Volkswagen has paid more than €28 billion in fines and penalties. (Reuters)
Updated 30 October 2018
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Volkswagen profit rises despite emissions certification woes

  • The company failed to get vehicles certified in time for new European emissions tests intended to more closely reflect cars’ pollution levels

FRANKFURT, Germany: Volkswagen saw net profit more than double in the third quarter even as sales fell due to delays certifying vehicles for new emissions tests.
Profit rose to €2.76 billion ($3.14 billion) from an adjusted figure of €1.07 billion in the same period last year. Sales revenue rose 0.9 percent to €55.2 billion, the company said Tuesday.
Vehicles sales, however, fell 3.6 percent in the quarter, to 2.54 million, as the company failed to get vehicles certified in time for new European emissions tests intended to more closely reflect cars’ pollution levels.
The company nonetheless reaffirmed its sales outlook for the full year and Volkswagen shares rose 3 percent in morning trading, to €146.70.
The new tests took effect September 1 and follow increased scrutiny of diesel emissions after Volkswagen’s 2015 scandal in which it was caught using software to turn emissions controls off when vehicles were not being tested. The result was emissions that were much higher in real-life driving. Other automakers were subsequently found to be using regulatory loopholes that permitted disabling of emissions controls at certain temperatures.
Volkswagen has paid more than 28 billion euros ($32 billion) in fines and penalties, two executives went to prison in the US and former CEO Martin Winterkorn was charged by US authorities, although he cannot be extradited.
Volkswagen said it had fewer one-time deductions to earnings in the third quarter. There were €800 million in one-time costs, compared with €2.6 billion in the year-ago quarter.
The company’s Audi division was fined €800 million this month for failing to exercise sufficient oversight to prevent the emissions cheating. The fine does not end investigations against individuals at Audi. Former division head Rupert Stadler was jailed while German prosecutors investigate; a court in Munich on Tuesday ordered his release on bail.
Looking ahead, the company said it was sticking to its earnings and sales forecasts for the year. It said deliveries to customers would “moderately surpass” last year’s record sales of 10.7 million vehicles. That made Volkswagen the biggest carmaker in the world, although the title was disputed by the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million and said Volkswagen was counting trucks as well.


Saudi Arabia relaxes ownership limits for foreign investors

Updated 26 June 2019
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Saudi Arabia relaxes ownership limits for foreign investors

  • Capital Market Authority chairman, Mohammed El Kuwaiz said, ownership in the Saudi capital market by financial investors had increased threefold this year
  • The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base

RIYADH,: Saudi Arabia has relaxed a 49% limit for foreign strategic investors in shares of listed companies, aiming to attract billions of dollars of foreign funds as the Kingdom opens up the region’s largest bourse to a more diverse investor base.
The country has introduced a raft of reforms in recent years to make its stock market, the region’s biggest, attractive to foreign investors and issuers.
The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base, the regulator, the Capital Market Authority (CMA), said in a statement on its website.
The Saudi stock market, which opened to foreign investors in 2015, has seen an upsurge in foreign fund flows since the start of the year due to its inclusion in the emerging markets indexes.
“In the beginning of this year, we had only one percent ownership in the Saudi capital market by financial investors, today it is over three percent, that’s more than a threefold increase,” CMA chairman, Mohammed El-Kuwaiz told Reuters in an interview.
“Our hope is that we can see a similar increase in terms of pace and magnitude as we start to create more avenues for foreign investors to come in to the market,” he added.
There will be no minimum or maximum ownership limit, although the owners must hold the shares for two years before they can sell.
Kuwaiz said huge demand from non-financial foreign investors pushed the CMA to grant approval on an exceptional basis to a number of strategic foreign investors to increase their holdings in Saudi listed companies. These included transactions at an insurance firm and a local bank.
Foreign investors have been net buyers of Saudi equities over the past few months, with purchases worth 51.2 billion riyals ($13.6 billion) until May 30. They currently own 6.6% of Saudi equities, of which 3.15% is owned by strategic foreign investors.
Local shares were incorporated into the FTSE emerging-market index in March and the MSCI emerging market benchmark in May this year. The country’s Tadawul All-Share Index is up 11 percent year-to-date.
Strategic foreign investors can take stakes in listed companies by buying shares directly on the market, or through private transactions and via initial public offerings.
Asked how this move would reflect on the Aramco IPO, planned for 2021, Kuwaiz said it would assure that the market has the physical regulatory and investor infrastructure to accommodate a company as large and as extensive as Saudi Aramco.