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Volkswagen brand suffers profit drop after emissions scandal

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By Euronews
Volkswagen brand suffers profit drop after emissions scandal

There was a big profit drop for the Volkswagen brand in the wake of its emissions scandal.

For all of 2016, underlying operating profit just for VW fell 11.1 percent to 1.9 billion euros.

That was revealed in the breakdown of the previously published Volkswagen group’s profit for 2016, which did hit a record for the year – excluding one-off items – of 5.14 billion euros.

That was helped by a strong performance by Porsche, with a nearly 14 percent rise in earnings to 3.9 billion euros, and a turnaround at its Scania trucks business.

Chief executive Matthias Mueller told the group’s annual news conference: “2016 was not the supposed horror year for Volkswagen, which we had initially expected. We have achieved a great deal; in the operational business and with essential requirements for the future. Despite having a lot of work to do, Volkswagen is back on the right track.”

Though he also admitted VW faces years of lawsuits from its cheating over diesel engine emissions tests.

With more than 22 billion euros set aside to pay for the scandal, the group – which encompasses 12 different marques – has been cutting costs and jobs as it streamlines operations.

Analyst Frank Schwope with Nord LB Bank was asked about the good results. He said: “They are partly down to the spending reduction measures already achieved, also because it has a strong model line up, and as customers seem able to forgive the mistakes, and have not punished the company for those deceptions.”

Also being cut following the emissions-cheating scandal is top executives pay.

The total bosses remuneration bill dropped 37 percent.

VW brand boss Herbert Diess received 3.93 million euros last year compared with 7.13 million euros in 2015.