VW reports 17% rise in quarterly earnings after leadership crisis

Volkswagen on Wednesday reported a sharp rise in first-quarter earnings in the aftermath of a tumultuous weekend that culminated in the resignation of group chairman Ferdinand Piech.

The German carmaker, which ranks second in global sales behind Toyota, has been reeling from two weeks of boardroom turmoil that led Mr Piech to quit after signalling he no longer supported chief executive Martin Winterkorn.

Returning investors' focus to the day-to-day performance of the company, VW on Wednesday reported operating income of €3.3bn in the three months to March 31, up 17 per cent compared with the same period last year.

Once more the standout performers were the company's upmarket divisions - Audi and Porsche. China was also an important source of VW's profit.

But the operating margin at the core VW passenger car brand remained stuck at just 2 per cent - a reminder of an area of underperformance that may have been the cause of Mr Piech's surprise statement on April 10 that he was "at a distance" from Mr Winterkorn.

VW group unit sales, including commercial vehicles, rose less than 2 per cent per cent to 2.5m in the first quarter. But that included strong rises at VW's luxury brands led by Audi, up 6 per cent, and Porsche, up 32 per cent.

Passenger car deliveries in China rose by just 1.9 per cent in the quarter. But operating income coming from VW's China joint ventures rose to €1.6bn, compared with €1.2bn in the same period last year.

This was largely down to the weakness of the euro versus the renminbi. But Philip Watkins, analyst at Citi, said: "A slowdown in China we find has been a key concern of investors recently given weak unit sales - this result suggests good pricing discipline, we believe."

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The group reported net profit of €2.9bn in the first quarter, up 19 per compared with one year ago. Revenue was 10 per cent higher at €52.7bn, partly because of favourable currency movements.

Wolfsburg-based VW stuck to its full-year guidance, saying it expects group revenue to increase by up to 4 per cent, and to record an operating margin of 5.5 per cent to 6.5 per cent.

However, it gave no new detail on the leadership situation. Berthold Huber, a trade unionist, has taken over the chairmanship on a temporary basis until a long-term successor to Mr Piech is appointed. Any update will likely have to wait until the company's annual meeting on Tuesday.

VW's shares rose less than 1 per cent in early Frankfurt trading to €242.10.

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