Volkswagen shares jump on surprise trading update showing operating result ahead of expectations
Motor manufacturer Volkswagen boosted its share price today with an ad-hoc trading update containing positive profit news.
The company said its operating results before special items is "significantly higher than market expectations for the first half of 2016" at €7.5bn (£6.3bn), "despite the ongoing economic impact from the diesel issue".
Volkswagen was engulfed in scandal last year when it was revealed that the company had fitted 11m cars with “defeat device” software, designed to cheat emissions tests. The company has agreed to buy back or fix nearly 500,000 diesel cars in the United States that were fitted with the cheat devices, which could set it back by $10bn (£7.6bn).
The scandal also led to an overhaul in VW's senior management – chief executive Martin Winterkorn resigned and the company was forced to set aside more than €16bn to deal with the fallout.
VW's stock plunged when the problems were revealed, and has yet to make a full recovery.
[charts-share-price id="367"]
The group said today that special items totalling €2.2bn "mainly related to further legal risks predominately arising in North America" had been included in the first half results, leaving its operating result after special items at €5.3bn.
VW said it "continues to anticipate that, depending on the economic conditions – particularly in South America and Russia – and the exchange rate development and in light of the diesel issue, we expect 2016 sales revenue for the Volkswagen Group to be down by as much as five per cent on the prior‐year figure".
"In addition to the emissions issues, the highly competitive environment as well as interest and exchange rate volatility and fluctuations in raw materials prices all pose challenges," the firm added.