VW Shares Advance After Profit Falls Slightly.
“We believe this 1Q performance provides clear support to our VW “Buy” case”
Volkswagen shares jumped almost 3% after it reported 1st quarter profits which were lower than last year’s but in line with investors’ expectations.
By mid-morning in Europe, VW shares were up 2.8% at 163.9 euros. Investors were impressed with VW’s profits, after Mercedes-Benz parent Daimler reported 30% lower earnings for the same period.
VW’s earnings before interest and taxes (EBIT) in the first quarter fell to 3.9 billion euros ($4.6 billion) from 4.2 billion ($4.9 billion) in the same period of 2018. Investors had expected profit would fall to 3.92 billion euros.
VW’s sales of cars and SUVs fell 3% to 2.55 million in the quarter. VW brand sales were down 4.5%, Audi slipped 3.6% and Porsche fell 12.5%.
VW said profits for the full year will be at the lower end of its predicted 6.5 to 7.5% margin forecast. Many carmakers face falling profits as markets weaken around the world and spending on new technology like electric cars and computer driven ones increase, with any likely payback date unlikely for a while yet.
VW set aside 1 billion euros ($1.2 billion) for additional legal expenses from its dieselgate emissions scandal. Dieselgate, which VW admitted to in 2015, has cost the company 29 billion euros so far ($33.8 billion).
Citi Research analyst Angus Tweedie liked the results.
“We believe this 1Q performance provides clear support to our VW “Buy” case with solid earnings performance despite market challenges as management’s focus on improving mix and efficiency gains traction,” Tweedie said.