Shaking off dieselgate, VW races back into profit

WOLFSBURG - Agence France-Presse

REUTERS photo

German auto giant Volkswagen on Feb. 24 said it raced back into the black in 2016 as car sales hit an all-time high, in the latest sign of its “dieselgate” scandal fading into the rearview mirror.

VW reported a net profit of 5.1 billion euros ($5.4 billion) last year, recovering from a stinging 1.6-billion-euro loss in the immediate aftermath of the emissions cheating revelations in 2015.

“While the past fiscal year posed major challenges for us, despite the crisis the group’s operating business gave its best-ever performance,” chief executive Matthias Mueller said in a statement.

The VW group -- which includes the brands Porsche, Audi and Skoda -- beat analyst expectations with record revenues of 217.3 billion euros, up nearly two percent on the year before.

Underlying or operating profit rose to 7.1 billion euros, from a loss of 4.06 billion in 2015, it said.

Despite the damage to its reputation by the dieselgate scandal, the group delivered 10.3 million vehicles in 2016, driven by strong demand in Europe and the Asia-Pacific region.

The record result meant VW overtook rival Toyoto to become the world’s top selling carmaker.

For 2016, the group said it planned to raise the dividend payout from 0.11 euros to 2 euros for preferred shareholders, and from 0.17 euros to 2.06 euros for ordinary shareholders.

Looking ahead, VW said it expected the upward trend to continue in 2017, penciling in a “moderate increase” in car sales and a four-percent rise in revenues.

“As the figures show, Volkswagen is very solidly positioned in both operational and financial terms. This makes us optimistic about the future,” Mueller said.

The VW group plunged into crisis after it admitted in September 2015 to installing software in 11 million diesel engines worldwide designed to dupe emissions tests to make the cars seem less polluting than they were.

The controversy, which triggered mass recalls and a sea of legal complaints, pushed VW into the red for the first time in more than 20 years in 2015 due to the provisions it had to set aside to cover the costs of the crisis.     

The group on Friday said it added another 4.4 billion euros to the pot in the last quarter of 2016, bringing the total amount set aside for re-fits, buy-backs, fines and compensation to 22.6 billion euros.

Volkswagen took a major step towards resolving some of its legal woes last month when it agreed to plead guilty to criminal charges in the United States, including fraud.

The group has so far committed to paying out more than $22 billion in fines and compensation to drivers, dealers and authorities in the US, where some 600,000 cars were equipped with the defeat devices.

But it has not offered any compensation to the millions of European drivers affected, to the dismay of EU officials who have piled pressure on VW to show the same generosity as in the US.