Germany’s Volkswagen says 2nd-quarter earnings soar to $1.6 billion

Volkswagen’s Q2 profit up strongly at $1.6B

BERLIN — Sales at Volkswagen AG motored ahead in the second quarter, thanks in part to strong demand from China and helping to push earnings sharply higher to euro1.25 billion ($1.6 billion), the company said Thursday.

The carmaker, based in Wolfsburg, Germany, had net earnings of euro283 million in last year’s April-June period.

Revenue was up 21.9 percent, to euro33.16 billion from euro27.2 billion, as the Volkswagen group — which also includes brands such as Audi, Skoda and Seat — delivered 8.8 percent more cars. Deliveries to customers rose to 1.87 million vehicles from 1.72 million.

Pretax profit, at more than euro1.9 billion, easily beat analysts’ forecast of euro1.2 billion.

High demand in western Europe, China and the Americas “was a key reason for our strong result, along with the boost provided by lower product costs and positive exchange rate effects,” chief financial officer Hans Dieter Poetsch said in a statement.

“This has allowed us to improve our financial strength even further,” he added. “Our goal is now to systematically continue this profitable growth path.”

The euro sank against the dollar in the year’s first half amid fears about the European debt crisis, though it recently has staged something of a recovery.

CEO Martin Winterkorn said that “first-half earnings were clearly in excess of our expectations.”

Volkswagen’s net earnings for the January-June period totaled euro1.67 billion, up from euro547 million a year earlier. First-half revenue was up 20.7 percent to euro61.81 billion from last year’s euro51.2 billion.

The company cautioned that “the dynamic growth in … revenue and earnings in the first half of 2010 will not continue undiminished in the second half.”

However, it said it still expects revenue and operating profit to be “significantly higher” this year than in 2009.

Over the first six months, VW’s global deliveries were up 15.8 percent on last year at 3.61 million vehicles.

Deliveries were up 45.7 percent to 950,729 cars in China, where the company’s share of the passenger car market remained steady at 17.9 percent, Volkswagen said.

Sales in the U.S. were up 29.2 percent at 175,323, bolstering VW’s market share to 3.1 percent from 2.8 percent.

In western Europe, sales were up 5.4 percent to 1.55 million — despite a drop of 15.8 percent in VW’s German home market, which has suffered in comparison with last year after a popular government car-scrapping bonus program expired.

Auto analysts at Sanford C. Bernstein Ltd. pointed to “volume, mix, currency” as the source of VW’s above-expectations performance.

They noted that the company was able to counter falling sales in Germany with increases elsewhere and said in a research note that it likely “enjoyed a very significant boost” from the strength of the dollar and British pound against the euro.

“VW has clearly blasted through our (forecast) numbers with better growth and better cost performance,” the analysts wrote. “We continue to have concerns about VW’s cost structure, future spending and the sustainability of (emerging market) growth — but at present our bearish view looks far too negative.”

Volkswagen shares were lifted by the report, rising 2.1 percent to euro80.23 in Frankfurt trading.