Volkswagen Expects Stable 2012 Earnings image

Volkswagen Ag. said Monday it plans to match last year’s record profit in 2012 and rise in 2013 as the new generation Golf and Audi A3 help offset softer demand in the European continent.

Volkswagen has outperformed many of its rivals as its broad product line-up has seen demand rising in growing or recovering markets like China and North America, but Europe, one of the most important markets for the Germans remains a key contributor to VW’s earnings.

“Despite all the uncertainties, we remain cautiously optimistic for the coming months,” Chief Executive Officer Martin Winterkorn said in a speech at the company’s headquarters in Wolfsburg, Germany.
“Our goal for operating profit is to repeat the high level we achieved in 2011.”

VW plans to spend 62bn euros on new plants and models in the next five years, as well as on research and development. It will also hire 50,000 more staff in the next six years.

The German automaker estimates that its new architecture to share parts across brands including luxury division Audi and Czech unit Skoda may cut production costs 20 percent and assembly times even 30 percent. But the technology costs may limit the some of the profits in 2012.

The Volkswagen Group’s sales revenue increased by 25.6 percent in the past fiscal year to €159.3 billion (previous year: €126.9 billion).

Consolidated operating profit rose to a record €11.3 billion, an improvement of €4.1 billion compared with 2010. Volume, mix and price effects were the strongest drivers (€5.9 billion). In addition, product cost savings of €1.1 billion had a positive effect.

In 2012 and 2013, sales proceeds are expected to exceed the 159.3 billion Euros recorded in 2011. According to CEO Martin Winterkorn, VW’s aim is to become the world’s most profitable automobile manufacturing group by 2018.