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VW Retains 2012 Targets, But Doubts Expressed For 2013

While its competitors fought desperately for survival, Volkswagen sailed on majestically with profits down a bit and stuck with its goals for 2012 of higher sales and steady earnings.

In the third quarter VW reported operating profit down about a fifth to €2.34 billion on the same period of 2011, while sales rose 27 per cent to €48.8 billion.

VW repeated its target of increased vehicle sales and revenues for 2012, and vowed to match 2011’s operating profit record of €11.27 billion.

Some investors believe VW can achieve this.

“Given Q3 2012 figures, and despite an obvious deterioration in the overall demand and pricing environment, we see no reason why VW cannot meet these targets,” said Citi Research analyst Harald Hendrikse.

Bernstein Research’s Max Warburton is not so sure, and has some doubts about 2013.

“We still think it could be a down year for earnings – although Q3 again shows VW shrugging off the challenges of a tough environment. VW has been helped significantly in 2012 by growth in China – as well as the recent Japanese troubles there – and subsidy-fuelled Brazil. With European markets deteriorating and Peugeot-Citroen warning of further pricing pressure, the outlook for 2013 remains uncertain. But VW does seem better able than most to beat the odds,” Warburton said.

Neil Winton – October 30, 2012

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