VW brand’s profit falls amid emissions scandal

(iStock)
(iStock)

Frankfurt - Volkswagen’s reeling namesake passenger-car brand posted a 38% drop in first-half profit as the carmaker set aside more money for litigation over its emissions-cheating scandal.

Operating profit at the VW brand fell to €88m from €1.43bn last year, Europe’s biggest automaker said in a statement. The shares fell 2.7% to €124.20 at 9:19.

Volkswagen is seeking to boost profitability at the brand, its biggest unit, to ensure future growth as the price tag of the emissions crisis climbs. Though the carmaker got court approval on Tuesday for a $15.3bn settlement to get the cars it rigged off roads in the US, its legal troubles are far from over.

Volkswagen set aside another €2.2bn in provisions in the second quarter, most of which was linked to the scandal, increasing the estimated cost to roughly €18bn.

All the company’s brands must “contribute to increasing efficiency at every link in the value chain,” chief executive officer Matthias Mueller said in the statement.

Volkswagen boosted its forecast for global vehicle sales this year, predicting a slight increase compared with 2015. It had previously expected sales to be stable. The company confirmed its target for a 5% revenue increase and said the operating profit margin excluding special items will be in a range of 5% to 6% of revenue, after reaching 6% last year.

The carmaker reported preliminary first-half results last week. Second-quarter group operating profit before special items rose to €4.39bn from €3.66bn a year earlier.

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