ALSO ON AUTOS
VW, Peugeot, Fiat Steer Clear
Of Woes of U.S. Rivals
July 24, 2008; Page B3
Shares in Volkswagen AG, PSA Peugeot-Citroën SA and Fiat SpA rallied Wednesday after all three auto makers posted strong earnings and maintained profit targets despite slumping demand in Western Europe, rising raw-material costs and continued currency woes.
Solid sales in emerging markets, a limited exposure to the sagging North American market and improved cost-cutting measures helped the car makers escape the auto-sector gloom.
Volkswagen, Europe's largest auto maker by sales, said second-quarter net profit rose 35% to €1.64 billion ($2.59 billion) from €1.22 billion a year earlier, driven by rising vehicle sales in South America and China. Revenue grew 4.5% to €29.49 billion from €28.21 billion.
Shares in Volkswagen closed 6.9% higher at €209.55, while the DAX blue-chip index was up 1.5%.
The German auto maker reiterated it expects increases in full-year operating profit, revenue and vehicle sales, noting that the forecast doesn't take into account "the effects of the acquisition of further shares of Scania on volume, earnings and financing data."
Earlier this month, Volkswagen received regulatory approval to increase its voting share in Swedish truck maker Scania AB to 68.6%.
The three auto makers largely escaped the woes currently weighing down rivals General Motors Corp. and Ford Motor Co., mainly the slumping North American market. Volkswagen generates only about 8% of its revenue in North America. Peugeot-Citroën doesn't sell cars in North America, and Fiat doesn't offer its Fiat-branded cars for sale there.
Peugeot-Citroën, Europe's second-largest car maker by sales, said net profit rose 49% in the first half to €733 million from €492 million a year earlier.
Shares in Peugeot-Citroën closed 9.2% higher at €34.90 in Paris.
Fiat, Italy's largest industrial company by revenue, said second-quarter net profit rose 1.9% to €604 million. Group revenue totaled €16.97 billion, up 12% from €15.18 billion.
Shares in Fiat closed up 14% at €11.86.
Write to Gordon Sorlini at gordon.sorlini@dowjones.com
WSJ.com/Autos
