Upbeat VW back in the black

RUSSELL HOTTEN

Volkswagen, Europe's largest car maker, pointed to continuing recovery in the motor industry by reporting better-than- expected earnings for the first nine months.

Net profits of DM185m (pounds 85m) compared with a DM73m loss last time. Ferdinand Piech, the chairman, was upbeat about the future.

Sales for the period totalled DM65.209bn, up 10.9 per cent from DM58.8bn a year earlier, while global deliveries totalled 2.66 million vehicles, up 6.4 per cent from 2.5 million.

Mr Piech, who at the Frankfurt Motor Show in September forecast that full-year profits would be slightly up, was more bullish yesterday, saying they would be "noticeably better". Last year's annual profit was DM150m.

Volkswagen, which has about 16.9 per cent of the European car market and 6.4 per cent in the US, had been hit by industrial disputes by the powerful IG Metall union.

The workers have won significant concessions, including a shorter working week, which caused concern among some German politicians and business leaders.

Mr Piech said the results were "all the more impressive for being influenced by the production shortfall in connection with this year's wage negotiations". He added that the positive trend in earnings continued in the third quarter both at the group and at the parent level.

VW, 20 per cent-owned by Lower Saxony, had resorted to short-time working to avoid politically sensitive large-scale redundancies. Mr Piech attri- buted the upward revision in profit forecasts to higher production and unit sales figures, and the success of the transformation process in the group and at the parent company.