VW operating profit up 30% as SUV push pays off

German auto giant Volkswagen said on Thursday that it was confident it could defy a worldwide squeeze in car sales over the full year. (AFP)
Updated 25 July 2019

VW operating profit up 30% as SUV push pays off

  • Rising demand for sports utility vehicles and premium brands boost automaker

FRANKFURT: Volkswagen Group shares rose 2 percent after the carmaker posted a 30 percent rise in second-quarter operating profit despite a drop in vehicle sales as rising demand for sports utility vehicles and premium brands boosted margins.

Volkswagen bucked a trend of falling demand for passenger cars by launching a range of higher-margin sports utility vehicles at a time when demand for sedans is falling. Daimler, Aston Martin and supplier Continental warned on profits this week.

“Very solid and clean set of numbers, marginally ahead of consensus,” Jefferies analyst Philippe Houchois said about Volkswagen’s earnings in a note
on Thursday.

The Wolfsburg, Germany-based company’s operating profit rose to €5.13 billion ($5.71 billion), up from €3.94 billion  in the second quarter last year. It was boosted
by the absence of a diesel charge VW booked in the year-earlier period.

HIGHLIGHTS

● VW Group vehicle sales drop 1.8 percent in Q2.

● VW says operating profit rises.

● VW reiterates outlook.

Volkswagen reiterated it expects vehicle deliveries in 2019 to exceed a prior-year figure and for revenue in the passenger cars and commercial vehicles divisions to grow at least 5 percent.

VW said that it continues to expect an operating return on sales in the passenger cars area and the group of between 6.5 percent and 7.5 percent. It reiterated that after special items, it expects the operating return on sales to be at the lower end of the expected range for the group and the passenger cars business area.

Peugeot said on Wednesday that it had delivered an operating margin of 8.7 percent in the first half of 2019, without releasing a more detailed breakdown of quarterly results.

By contrast, Volkswagen Group’s operating return on sales rose to 7.2 percent in the first half,
up from 6.8 percent in the year-earlier period. 


South Korea seeks arrest of Samsung heir in succession probe

Updated 32 min 30 sec ago

South Korea seeks arrest of Samsung heir in succession probe

  • Jay Y. Lee faces a return to jail just a little over two years after being released from detention

SEOUL: South Korean prosecutors have requested an arrest warrant against Samsung Group heir Jay Y. Lee, they said on Thursday, in the investigation of a controversial 2015 merger and alleged accounting fraud in a suspected bid to aid his succession plans.
The move spells fresh trouble for Lee, who, if arrested, faces a return to jail just a little over two years after being released from detention in February 2018.
Lee already faces trial on a charge of bribery aimed at winning support to succeed ailing group patriarch Lee Kun-hee, and which involved former President Park Geun-hye, and spent a year in detention until the bribery case was suspended in 2018.
Prosecutors said they sought Lee’s arrest on suspicions of stock price manipulation and audit rule violations, among other offenses.
In a statement, Lee’s lawyers expressed “deep regret” at the prosecution’s decision to seek his arrest, adding that he had fully cooperated with the investigation while Samsung was going through management crises.
Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics after the Korean financial watchdog complained the firm’s value had been inflated by $3.7 billion in 2015.
Prosecutors contend the violation helped boost the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, and merged with Samsung C&T, a de facto holding firm, Yonhap news agency said.
Samsung requested an outside review of the investigation to weigh the validity of the indictment and the Seoul Central District Prosecutors’ Office is following the necessary procedures, it said in a statement.
Last month, prosecutors questioned Lee, 51, over the latest investigation. He also apologized for a series of controversies around his succession planning.
Lee’s year in detention followed separate charges that he bribed Park to win government support for the 2015 merger which helped tighten his control of South Korea’s top conglomerate.