Volkswagen News

May 2007
VOLKSWAGEN REPORTS SUBSTANTIAL FIRST-QUARTER EARNINGS GROWTH

All Group brands improved operating profit – Outlook reiterated

WOLFSBURG, Germany - The Volkswagen Group delivered more vehicles, generated higher sales revenue and increased earnings substantially in the first quarter of 2007.

"We made a good start to 2007 and further improved our financial position", said Hans Dieter Pötsch, Volkswagen AG's CFO, commenting on the publication of the quarterly figures. "Our new product initiative was successful. All Group brands increased their sales in the first quarter." The Volkswagen Group delivered 1.5 million vehicles worldwide, an increase of 7.9 percent. Sales revenue grew by 5.1 percent to €26.6 billion. "The significant progress we have made in improving our competitiveness is positively reflected in our earnings", noted Pötsch. "All brands contributed to this success." At €1.1 billion, the Volkswagen Group's operating profit was up significantly year-on-year. Profit after tax more than doubled to €740 million.

"The good market acceptance of our attractive models and the sustained benefits of our cost and process optimization programs are reflected in the figures for the individual brands", said Pötsch. "All Group brands improved their operating profit." The Volkswagen Passenger Cars brand increased its operating profit by €435 million to €386 million in the first quarter. This is attributable primarily to the successful restructuring measures implemented last year. At €401 million, Audi's operating profit increased by €56 million year-on-year. Lamborghini also recorded positive earnings growth. The Škoda brand was again successful: its operating profit rose by €29 million to €172 million. SEAT posted an operating loss of €11 million, a substantial reduction in the previous year's first-quarter loss. The Bentley brand increased its operating profit by €33 million to €38 million due to volume growth. The operating profit generated by Volkswagen Commercial Vehicles also increased, by €15 million to €66 million. The Financial Services Division again made a significant contribution to the Volkswagen Group's earnings. At €258 million, its operating profit exceeded the previous year's high level by €22 million.

The good result and the disciplined management of costs and investments resulted in a substantial improvement in liquidity in the Automotive Division. The ratio of investments in property, plant and equipment to sales revenue (capex ratio) remained at a low 3.2 percent, without affecting the development of new models. Net liquidity increased significantly compared with year-end 2006 to €9.4 billion.

CFO Pötsch reiterated expectations for the current year. He said that the Volkswagen Group will systematically continue the new model rollout, increase productivity and further improve processes. "We expect to increase worldwide deliveries to customers slightly in 2007 and to exceed 2006 sales revenue. 2007 operating profit is expected to be higher than 2006 operating profit before special items." The Group is again expecting a positive net cash flow in the Automotive Division. For 2008, the Board of Management is confident of achieving a consolidated profit before tax of at least €5.1 billion.