Volkswagen Reports Strong First Half, Confirms Upbeat Outlook

Volkswagen AG (IW 1000/10), Europe's biggest automaker, said its profits in the first half of the year soared by more than a third, leading it to confirm its upbeat forecast for 2012.

The group, which manufactures 10 makes of vehicles, reported a 36% rise in net profit to 8.8 billion euros ($10.7 billion) during the first six months of 2012.

Meanwhile, operating profit jumped nearly 7% to 6.5 billion euros after the group sold 4.6 million vehicles around the globe.

But the automaker cautioned that heightened competition and uncertainty touched off by the eurozone debt crisis in some of its key European markets will weigh on growth this year.

"The Volkswagen Group's main competitive advantages are its multibrand strategy, a range of vehicles that covers almost all segments from subcompact cars to heavy trucks and its growing presence in all major regions of the world, together with its wide range of financial services," the company said.

"This will become even more attractive thanks to the integration of Porsche, with its offering of exclusive sports cars."

Volkswagen and Porsche surprised markets earlier this month by announcing that they would move their planned merger forward by two years in a deal set to unlock hundreds of millions of euros in untapped synergies.

"The contribution in full of Porsche's automotive business, which is expected to take place as of Aug. 1, 2012, will lead to its consolidation in the Volkswagen Group," the company said.

"However, the resulting increase in sales revenue will be relatively slight due to consolidation effects."

Volkswagen, which includes Seat, Skoda, MAN trucks, Scania and Audi in its stable of brands, appears far more buoyant than other German automakers such as General Motors unit Opel.

"Our goal for operating profit is to match the 2011 level," it said.

On Wednesday, Daimler, which makes the iconic Mercedes Benz, said its second-quarter net profit tumbled 11% to 1.52 billion euros.