VW profit falls 80% as buyers favor less costly automobiles

Net income dropped to 960 million euros (US$1.3 billion), or 2.44 euros per preferred share, from 4.75 billion euros, or 11.98 euros, a year earlier Wolfsburg, Germany-based Volkswagen said in a statement today. Profit missed the 1.01 billion-euro average estimate compiled by Bloomberg from 13 analysts.

The carmaker, which has a goal of overtaking Toyota Motor Corp. in deliveries and profitability by 2018, increased vehicle sales last year by 1.1 percent, with growth at the namesake VW and Skoda brands more than making up for a decline at Audi. New models at all divisions will help the group raise deliveries, revenue and operating profit in 2010, the company said today.

“Volkswagen can't deny that the crisis had an impact on their model mix,” said Horst Schneider, an HSBC Holdings Plc analyst in Dusseldorf, Germany. Fourth-quarter operating profit, which Schneider calculated at 337 million euros, was “slightly weaker” than expected, reflecting the desire for smaller cars.

Volkswagen's preferred shares fell 78 cents, or 1.3 percent, to 59.80 euros in Frankfurt trading, valuing the carmaker at 25.1 billion euros.

Porsche Combination

VW is combining with Porsche SE, the maker of the 911 sports car, and in January bought 19.9 percent of Suzuki Motor Corp., Japan's second-largest minicar manufacturer, for US$2.5 billion. Investors at a Dec. 3 meeting approved the sale of as many as 135 million non-voting preferred shares in the next five years to help fund the Porsche purchase.

Operating profit fell 71 percent to 1.96 billion euros. Earnings and sales will rise this year “despite a shift in volumes between the markets,” Volkswagen said. Deliveries increased in 2009 to a record 6.29 million cars and sport- utility vehicles.

The company plans a dividend of 1.66 euros per preferred share compared with 1.99 euros a year earlier. Volkswagen, which is scheduled to release the annual report on March 11, didn't release a breakout of fourth-quarter earnings.

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