VW Posts Decline In Profit

Ah, it's First Quarter results time. After experiencing a string of good press with it's market share successes, VW's profit results for Q1 have posted a decline. While some might seek to contrast it with the fact that VW might become the World's Largest automaker this year, I'm going to take it for what it is: a remarkable result considering today's economy. 

So there's no journalistic sensationalism to be found here. The fact the Volkswagen AG is achieving a profit at all is amazing. Companies around the world are losing cash. Even the once (and I quote) "invincible" Toyota money printing press is posting losses for the first time since it began reporting such numbers 1941. Think about that; it's an incredible record of success that is being brought down by this economic crisis.

It is against that backdrop that VW has reported a 73.8% percent decline in operating profit from the year earlier. The loss is primarily due to a 17.8% overall decline in unit volume. When you're dealing with sales in the millions and economies of scale, these sales losses have a bigger proportional impact. A 17.8% decline in sales translates into more then just a 17.% decline in profit, as you can see.

Some key indicators are up from last year. Market share as I've said earlier has increased from 9.7 percent to 11 percent globally. Cash on hand is also up over last year, as is net cash flow for the quarter. VW expects continued market share gains and an overall outperforming of the general market in 2009. 11% market share, quarter and a profit of €243 million euros ($314 million at current exchange rates). That's in comparison to In comparison with last year's €929 million euros ($1.22 billion USD at current exchange rates).

 VW is positioning itself  to emerge on top once this crisis has passed. Say hello to the new Toyota?