Perception Gap, Made In Germany: Volkswagen Triples 2010 Half Year Profit

Did we mention that there is a remake of the economic miracle in Europe going on? Despite tanking car sales, despite daily stories about near bankrupt EU-countries, European manufacturers are in high gear. Did we mention that despite imploding sales at home, Volkswagen delivered 16 percent more units to customers in the first six months of 2010? One would think that might have some bearing on VeeDub’s financials. It sure did.

In the first half of 2010, Volkswagen more than doubled its operating profit to €2.8b (€1.2b in H1 2009). But wait, this figure does not include the operating profit of €804m from the joint ventures in China. That number jumped from €294m in the same period of 2009. All in all, VW more than tripled its profit before tax to €2.6b (€0.8b H1 2009). Once taxes are paid, a tidy profit of €1.8b ($2.35b) will remain in Volkswagen’s books, a nice jump from €0.5b in the same period of 2009.

The good news “were clearly in excess of our expectations”, admitted Martin Winterkorn at the presentation of the interim report. Perception gap, made in Germany. His CFO Hans Dieter Pötsch added that “high demand for Group models in Western Europe, China, and North and South America was a key reason for our strong result, along with the boost provided by lower product costs and positive exchange rate effects.”

Volkswagen sits on something that has become nearly extinct in the business: a pile of money. According to a Volkswagen communiqué, “net liquidity in the Automotive Division increased further in the reporting period to €17.5b, up 42.2 percent year-on-year.” In US dollars, that’s around $23b in free cash-flow.

For the rest of the year, “the Board of Management expects that deliveries to customers will be significantly higher than in 2009, due among other factors to the positive business growth in China.” If you are a numbers junkie, the complete half year report can be downloaded here.