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Volkswagen’s Profits Down in 2002

February 19, 2003

FRANKFURT, Germany (AP) _ Volkswagen AG’s profits fell 11 percent last year as revenue slipped 1.8 percent amid weak sales in key markets such as Germany and the United States.

The German automaker said Wednesday it earned 2.58 billion euros ($2.76 billion) in 2002 compared with 2.92 billion euros a year earlier.

Revenue fell to 86.95 billion euros ($93.9 billion) from 88.54 billion euros in 2001.

The profit drop was in line with analysts’ expectations, and the company’s stock was off 0.4 percent at 36.24 euros ($38.77).

VW did not explain the numbers in detail or a issue forecast for this year. More details are expected at its March 11 annual news conference.

Volkswagen faced a tough sales environment in key markets such as Germany, where demand is weak, and the United States, where sales fell 4.9 percent last year. The automaker faces stiff price competition from U.S. rivals who have offered costly sales incentives _ a practice VW has avoided, saying it undermines the brand long-term.

It was also plagued by a less favorable exchange rate in North America, with a weaker dollar meaning fewer euros gained from sales. Additionally, leading models such as the Golf have aged, putting more pressure on sales.

Securities analyst Patrick Juchemich at Sal. Oppenheim bank in Frankfurt said the company’s statement revealed ``nothing spectacularly new.″

He said the market would await first quarter results to see whether profits from China could offset weakness in the United States and Europe.

China has overtaken the United States as Volkswagen’s No. 2 market after Germany. The company, which launched operations in China in 1985, has 40 percent of the market with its two Chinese joint-venture partners.

For 2002, the company met its own goal of pretax profits of 4 billion euros ($4.3 billion), coming in at 3.98 billion euros (US$4.25 billion).

The company said it would keep its dividend unchanged at 1.30 euros ($1.39) per ordinary share.

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