German auto giant Volkswagen AG (VLKAF.PK,VKW.L) Wednesday reported a decline in first-quarter profit, as sales were down on declining European markets. Deliveries to customers grew about 5 percent in the quarter, and it expects to increase deliveries year-over-year, amid a challenging environment.
The company noted that demand for its vehicles outperforms the market as a whole worldwide, with share of passenger car market rising to 12.6 percent from 12.2 percent in the prior year. In 2013, Volkswagen plans to launch a large number of fascinating new models, which will help further expansion of its strong position in global markets, it added.
For the period, the Group increased its deliveries to customers by 4.8 percent to 2.31 million vehicles, with strong growth in China. Vehicle sales were 2.38 million units, up 5.1 percent from a year ago. Quarterly production increased 3 percent to 2.39 million units.
In the first quarter, the company's profit fell 38.2 percent to 1.95 billion euros from 3.15 billion euros in the previous year. Operating profit was 2.34 billion euros, down 26 percent from last year, impacted by contingency reserves affecting the areas of Passenger Cars and Power Engineering.
Sales revenue for the quarter declined 1.6 percent to 46.57 billion euros, reflecting negative effects from declining European markets.
For full-year 2013, Volkswagen Group's sales revenue are still expected to exceed the prior-year figure. In 2012, the company had posted sales revenue of 192.68 billion euros. Given the ongoing uncertainty in the economic environment, the Group's goal for operating profit for the year is to match the last year level.
The company said its outlook applies equally to Passenger Cars Business Area, Commercial Vehicles, and Power Engineering Business Area, that remains affected by high write-downs related to purchase price allocation, as well as Financial Services division.
The firm stated that it is not completely immune to intense competition and the related impact on its business.
Last month end, Volkswagen had recalled 384,181 vehicles in China, citing the possibility of power output interruptions due to faulty gearbox electromechanical unit.
On Frankfurt's Xetra, Volkswagen shares are currently trading at 150.2 euros, up 3.3 euros or 2.25 percent, on a volume of 1.25 million shares.
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