VOW3 Volkswagen AG

By William Boston 

BERLIN -- Volkswagen AG bucked the downward trend in the global auto industry as it reported robust second-quarter earnings on the back of strong sales of its high-margin sport-utility vehicles by its VW and Porsche brands.

The performance of Volkswagen's passenger cars and sports car maker Porsche helped offset weaker performance at Audi, which is suffering from the continuing fallout from the diesel emissions scandal and falling global demand for German luxury vehicles amid trade tensions and economic uncertainty.

Volkswagen said Thursday that net profit for the entire group rose to EUR3.9 billion ($4.3 billion) in the three months to the end of June from EUR3.2 billion a year ago. Revenue rose 7% to EUR65.2 billion. The strong earnings were underpinned by a 20% increase in net earnings in its core automotive division to EUR3.5 billion.

The auto maker said earnings for the first half of the year rose about 7% to EUR6.9 billion but were tempered by Audi's weaker performance and a decline in earnings from its China businesses, where sales fell 3.9% to 1.9 million vehicles in the first half.

"The Volkswagen group performed very well in a generally weaker overall market," Chief Finance Officer Frank Witter said in a statement. "We also confirm our outlook for the Volkswagen group for the year as a whole."

Volkswagen said it took diesel-related charges totaling EUR1 billion in the first half of the year, showing that the 2015 diesel emissions cheating scandal continues to dent earnings.

Volkswagen didn't escape the pressures from the deteriorating global economy, reporting that new car deliveries in the first six months of the year fell 3.1% to 5.2 million vehicles world-wide, hit by declining sales in Europe and China.

Europe's biggest auto maker by sales reacted to the weaker demand in key markets by sharply curtailing production at its factories. Output at its main plants in Germany fell 15% in the first half from a year ago and production was down 6.3% world-wide.

The Volkswagen passenger car brand, the company's biggest business by sales, achieved an increase in earnings in the first half despite a 2.3% drop in sales to EUR1.9 billion, as the company shifted its product mix toward SUVs, which are more profitable, and slashed costs.

Audi sales fell 8% to EUR28.8 billion in the first half, hit by diesel woes and new model costs, and pretax earnings were down 18% at EUR2.3 billion.

Sales at Porsche, the company's sports car brand, rose 9% to EUR12.2 billion as earnings rose 2.5% to EUR2.1 billion.

Write to William Boston at william.boston@wsj.com

(END) Dow Jones Newswires

July 25, 2019 03:57 ET (07:57 GMT)

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