FRANKFURT, Germany: Automaker Volkswagen says first quarter profit rose 19 percent as cost-cutting improved profit margins at its namesake brand and European auto sales show a modest recovery.
Net profit rose to 2.93 billion euros ($3.23 billion) in the January-March quarter, from 2.47 billion euros in the same quarter a year ago.
Volkswagen AG said Wednesday that its efforts to reduce costs had saved more than 100 million euros in the quarter alone at the Volkswagen brand, raising the profit margin to 2.0 percent from 1.8 percent. The Volkswagen brand was still hit by falling sales in Russia, which is suffering from economic sanctions over Ukraine and a fall in the ruble, and in South America.
But the brand gained ground in Spain, Britain and Germany during the quarter. European auto sales in general are bouncing back slowly as the economy recovers from a crisis over high government and bank debt in the 19 countries that use the euro currency.
Volkswagen is the world's No. 2 automaker by sales, but its Volkswagen brand has struggled to contain costs and improve profitability. Its other brands include luxury makes Audi and Porsche. The company's challenges appear to lie behind a battle amond the company's directors that resulted in the resignation Saturday of board chairman Ferdinance Piech. Piech had said in an interview that he was "at a distance" from CEO Martin Winterkorn. Winterkorn, however, quickly obtained the support of other board members and Piech resigned. The company has yet to choose a new board chairman.
Group sales rose by 10.3 percent to 52.7 billion euros, benefiting from higher sales volumes, a better model mix, and exchange rate changes.
The company stayed with its cautious outlook for the year. "We expect trends in the passenger car markets in the individual regions to remain mixed," Chief Financial Officer Hans Dieter Poetsch said in a statement.