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. 


Oman said to mull new regional airline

Updated 57 min 56 sec ago

Oman said to mull new regional airline

DUBAI: Oman is considering setting up a new regional airline that could take over domestic operations from state carrier Oman Air, two sources familiar with the matter told Reuters.

A request for proposal was issued this month by state entity Oman Aviation Group for a feasibility study into operating the new airline, “Oman Link,” the sources said.

Setting up a new airline for domestic flights would allow Oman Air to focus on its international network where it competes with large Gulf carriers Emirates, Qatar Airways, and Etihad Airways.

The new airline could partner with Oman Air with both carriers connecting passengers to each other but would have its own independent management, the sources said on the condition of anonymity because the details are private.

Proposals are to be submitted by Nov. 11, one of the sources said.

The new airline would use regional jets for domestic flights and potentially later to other cities in the region where there is not enough demand to fill the larger single aisle jets used by other airlines in Oman.

FASTFACT

Oman Air operates flights to four airports in the country, including the main Muscat International.

Oman Aviation Group and its unit Oman Air did not respond to separate emailed requests for comment.

Oman Air operates flights to four airports in the country, including the main Muscat International, according to its website.

The airline uses 166-seat Boeing 737 jets and 71-seat Embraer E175 aircraft on domestic and regional flights.

Both aircraft types are too costly to consistently operate domestic routes at a profit, according to industry sources.

Oman has been restructuring its aviation sector in recent years. Oman Aviation Group was formed in 2018 and includes Oman Air, Oman Airports and Oman Aviation Services.

A budget, second airline, Salam Air, was launched in 2017. It is owned by Omani government pension funds and the Muscat municipality.

Last week, Eithad and Air Arabia said they were jointly setting up a low cost carrier in Abu Dhabi.