German car-manufacturer Volkswagen AG swung back to profit in the first quarter of 2016 after reporting a record loss during FY 2015 as the absence of new provisions against earnings led to optimism that the company has absorbed the bulk of the impact of the diesel emission crisis.
Key takeaways from Volkswagen’s 1Q 2016 results:
- Revenue during 1Q 2016 fell 3.4% y/y to €50.96bn.
- Profit for 1Q 2016 declined 20% to €2.31bn ($2.57bn) from €2.89bn a year ago, and below consensus estimates of €2.45bn.
- Operating profit excl. Chinese joint ventures, rose 3.4% to €3.4bn, led by a windfall of €309m, largely from foreign exchange adjustments to the €16.2bn that Volkswagen set aside in 2015 to cover the costs of the diesel crisis.
- Operating earnings excl. currency gains for the company in 1Q 2016 were roughly at the same level as last year.
- The company’s two Chinese joint ventures contributed €1.2bn in pretax earnings, down from €1.6bn a year ago. The earnings from China were booked as an equity gain by Volkswagen and appear in its net profit.