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Volkswagen Sees Strong Q1; On Track For Profitable 2011 - Update

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German automaker Volkswagen AG (VOW.BE,VLKAF.PK,VKW.L) Thursday said it recorded a positive start for fiscal year 2011, and sees strong first quarter. The company also noted that it remains on track for profitable growth for 2011, after the strong 2010, which it calls the 'most successful year in its history'. Further, referring to the planned merger with Porsche, Volkswagen said, additional key steps for the operational level cooperation are planned for the current year.

For the period up to 2015, Volkswagen also plans to invest 53.5 billion euros in the Automotive Division, plus an additional 10.6 billion euros in China.

In the first two months of 2011, global deliveries were about 1.2 million vehicles worldwide, up 17.5 percent, meaning that company's growth again outperformed the market, it said.

Martin Winterkorn, CEO of Volkswagen, during the presentation of the company's 2010 financial results, said, "We are highly satisfied with our current business performance and expect a strong first quarter on all fronts."

The company, at the level of its operating business, expects the positive trend seen in the previous fiscal year to continue in 2011. The sustained growth path is projected to continue in the following years as well, with further expansion in its market position.

In 2010, the company, as reported on February 25, recorded a profit attributable to Volkswagen of 6.84 billion euros or 15.17 euros per basic share, significantly higher than 960 million euros or 2.37 per basic share last year.

The strong results reflected positive exchange rate effects, and increased earnings contributions by its Swedish commercial vehicles unit Scania AB, and the Volkswagen Financial Services. The higher than expected product cost savings, and earnings from equity-accounted investments and put/call rights relating to Porsche Zwischenholding GmbH also favored the results.

Above all was a 20.6 percent growth in sales revenue to 126.88 billion euros, as Automotive division was supported by roaring demand, especially from China.

In 2010, the global unit sales in the automotive industry rose 11.4 percent to 58.7 million, while Volkswagen outperformed with a 13.7 percent rise in deliveries to 7.2 million vehicles, thanks to the strong recovery in the global automobile markets. Volkswagen Group's global share of the passenger car market rose to 11.4 percent from 11.2 percent.

For 2011 as a whole, the Board is expecting a further improvement in deliveries, sales revenue and operating profit, despite a potential decrease in positive volume effects due to ongoing volatility in interest and exchange rates, and uncertainty on the commodities markets.

In the medium to long term, the Board anticipates that the Volkswagen Group will be able to leverage its competitive advantages to an even greater extent.

Volkswagen noted that its strong 2010 results brought it closer to implementing its 'Strategy 2018', which aims to increase unit sales to more than 10 million vehicles by 2018 and to lift the profit before tax to over 8 percent. In the process, the company will also create more than 50,000 additional jobs worldwide in the period up to 2018.

Recently, the company said its Boards will propose to May 3 Annual General Meeting a dividend of 2.20 euros per ordinary share and 2.26 euros per preferred share, higher than last year's 1.60 euros and 1.66 euros, respectively.

In connection with its pending merger with Porsche, Volkswagen acquired the automobile trading business of Porsche Holding Salzburg effective March 1, and added that it has planned additional key steps for the current year.

Volkswagen is currently trading at 106.60 euros, down 2.95 euros or 2.69% in Berlin Stock Exchange.

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