FRANKFURT, May 2 — German car behemoth Volkswagen today reported a slip in profits in the first quarter, but defied a soft patch in the global car market with rising revenues.

Net profits at the group fell 7.5 per cent between January and March, to just over €3 billion (RM13.9 billion).

The group said the bottom line was weighed down by a fresh one-billion-euro charge over “legal risks” related to its “dieselgate” emissions cheating scandal.

The charge continues 2018’s pattern — when the group booked €3.2 billion linked to its 2015 admission to manipulating millions of diesel cars to appear less polluting under test conditions than on the road.

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It brings the total cost of the diesel scandal so far in fines, compensation, buybacks and refits to €30 billion.

Counting out the one-off effect, operating profits before special items grew 15.2 per cent in the first quarter, to €4.8 billion, on the back of revenues up 3.1 per cent at just over 60 billion.

VW managed to lift revenues despite a 6.7-per cent drop in unit sales, to 2.6 million vehicles over the quarter.

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The group said the fatter turnover was due to sales shifting in favour of more profitable models, especially at the flagship VW brand, as well as a strong performance by its financial services division.

Its operating margin — an indicator closely followed by investors — climbed 0.9 percentage points to 8.1 per cent.

VW was “off to a good start this year,” chief financial officer Frank Witter said in a statement.

The results were welcomed by the market, with VW gaining 4.7 per cent to trade at €162.28, topping the DAX index of blue-chip shares shortly after 11am in Frankfurt (0900 GMT).

Struggling luxury brands

Witter declined to explain the reasons for the new one-billion-euro charge, saying “active legal proceedings” prevented him from discussing them “in the interest of the group and its owners”.

“The one billion is made up of lawyers’ costs, settlements and generally legal questions that remain open,” he said.

Looking in more detail at the group’s results, its VW brand increased operating profit 4.8 per cent, to €921 million— a figure that did not include its €400 million share in the legal charge.

Meanwhile, earnings at both high-end Audi and luxury Porsche fell.

Audi continues to battle with the transition to a new emissions testing procedure, while Porsche struggled with lower sales.

Over the whole year, the group stuck to its targets of unit sales to “slightly exceed” 2018’s level, with revenues “up by as much as five per cent”.

It aims for an operating margin of between 6.5 and 7.5 per cent.

VW is “facing challenges in connection with global economic risks,” Witter said, adding that the group must “pick up the pace when it comes to our transformation”.

Bosses plan between 3,000 and 5,000 job cuts by 2023 as part of a massive transition to electric mobility. — AFP