Volkswagen Reports Profit, Analysts Skeptical
WOLFSBURG, Germany (AP) _ In a dramatic turnaround that astounded analysts, the struggling Volkswagen group on Wednesday announced a third-quarter profit of 70 million marks, or $41 million.
″You sort of wonder how it is possible,″ said Dagmar Bottenbruch, an auto analyst with CSFB.
Referring to VW’s purchasing chief, Jose Ignacio Lopez de Arriortua, Bottenbruch said, ″We have always liked Mr. Lopez, but if he really has been able to do this, he is not a genius, he is a god,″ Bottenbruch said.
Lopez is battling allegations that he took company secrets when he was hired away from General Motors in March to cut costs at Volkswagen.
For the first nine months, the VW group posted net losses of 1.53 billion marks, or $905 million, in contrast to a profit of 549 million marks for the same period of 1992. Sales for the nine-month period were 56.36 billion marks, or $33.3 million, down 11 percent from 63.59 billion marks in 1992.
VW AG, which produces Volkswagen brand cars, also reported a quarterly profit, of 177 million marks, or $104 million, despite total nine-month losses of 768 million marks, or $454 million.
Despite plummeting sales and production, VW spokesman Hans-Peter Blechinger said the company hadn’t added in hidden reserves - as allowed by German accounting rules - to come up with its third-quarter gain.
The return to the black was solely from business activities, he said.
Volkswagen AG’s car output in Germany tumbled 30 percent to 1.02 million cars in the first nine months. The company, Germany’s largest auto maker, makes cars in Europe, Brazil, Mexico, South Africa, and China. Its Spanish subsidiary SEAT is expected to generate losses of $739 million this year.
In an effort to lower production but avoid massive layoffs, Volkswagen has proposed cutting the work week in its German factories to four days. Negotiations with the union were to take place Thursday.