Volkswagen Group's profit rose 3.4% in the first quarter of 2016, although profit at the core VW brand plunged 86%, highlighting the challenge the carmaker faces in emerging from the nearly nine-month-old emissions cheating scandal.
Group operating profit climbed to €3.44 billion ($3.83 billion) from €3.33 billion last year, VW said in a statement.
The result included about €300 million in positive special items, including currency-related adjustments on the provisions VW set aside to cover costs related to the diesel cheating. Revenue fell 3.4% to €51 billion.
The company has "achieved respectable results under difficult conditions", CEO Matthias Mueller said in the statement. "2016 will be a transitional year for Volkswagen that will see us fundamentally realign the group".
Quarterly operating profit at the core VW brand fell to €73 million from €514 million, while its operating margin was a meager 0.3%. In contrast, the group's Porsche and Skoda units provided some good news while Audi's result was flat and Bentley swung to a loss.
Porsche's operating profit increased to €895 million from €765 million due to higher unit sales. Its operating margin grew to 16.6% from 15.1%.
Skoda's operating profit rose by just over 30% to €315 million with its margin rising to 9.3% from 7.6%.
Audi's operating profit was €1.3 billion, almost level with last year's first-quarter result. Its operating margin dropped to 9.0 from 9.7% on currency effects and higher investments in new products and expanding production.
Seat, the company's low-cost Spanish brand, operating profit rose to €54 million from €33 million. Its profit margin grew to 2.6% from 1.5%.
Bentley swung to a €54 million loss compared with a €49 million profit in the same quarter last year.
Volkswagen’s performance also suffered in China, its biggest market. Proportionate profit from its two Chinese joint ventures fell 27% to €1.17 billion.
VW stuck to its full-year outlook, saying revenue will decline as much as 5%, while the operating profit margin excluding special items will be in a range of 5-6% of revenue after reaching 6% last year.
Higher-than-expected group earnings reflect stronger momentum in VW's vehicle sales, benefiting from rebounding demand in China and growth in the high-margin European market.
Despite the woes, the 12-brand group eked out a 0.8% growth in worldwide deliveries to 2.5 million vehicles in the first three months, passing global market leader Toyota Motor Corp.’s 2.46 million.
