Premium cars drive VW profit above pre-pandemic levels

Volkswagen's first-half operating profit is expected to reach around €11bn (roughly R185.2bn), it said on Friday, topping pre-pandemic levels on strong demand in Europe and the US, particularly for Porsches and Audis.

The upmarket brands were less affected by an ongoing global shortage of crucial semiconductors, the German automaker said, adding its financial services arm also helped to boost earnings.

In the same period last year, Volkswagen posted an operating loss of €1.49bn (roughly R25.2bn), hit by the coronavirus crisis, while it made a profit of around €9bn (roughly R152.1bn) in the first half of 2019.

Volkswagen's shares rose as much as 5.8% to the top of Germany's blue-chip DAX index.

Business in China, the world's largest car market, was slightly weaker in the period, Volkswagen said. Industry data earlier showed that auto sales in China fell 12.4% in June year on year, hit by the global chip bottleneck.

Volkswagen, Europe's largest carmaker, said it now expected the main impact of the shortage, which has also hit rivals, to occur in the second half of the year.

The group said first-half reported automotive net cash flow was expected to reach around €10bn (roughly R169bn), versus €5.57bn (roughly R94.1bn) in 2019 and a negative €4.8bn (roughly R81.1bn) last year.

Volkswagen, whose supervisory board is meeting to discuss a contract extension for CEO Herbert Diess, is scheduled to publish full second-quarter results on July 29.