Volkswagen brushes 1 billion euro legal hit aside with higher SUV sales

Sales of higher-margin sports utility vehicles and cost cuts assisted Volkswagen to brush a 1 billion euro legal charge aside to meet first-quarter operating profit forecasts on Thursday, sending its shares 4.7 percent higher.

Revenues prior interest and taxes (EBIT) dropped to 3.9 billion euros ($4.4 billion) from 4.2 billion a year ago but were in line with the 3.92 billion euros expected by experts regardless of the extra legal charges.

Adjusted for one-off factors, EBIT increased by a forecast-beating 14 percent, or 0.6 billion euros, to 4.8 billion euros, at a time when other automakers and providers were cutting their outlook.

Luxury brands Porsche and Audi remain significant profit contributors, comprising around 40 percent of group EBIT.

A boost in demand for higher margin sports utility vehicles at the VW brand had helped in boosting profits, a trend that is expected to carry on for the rest of the year, the automaker stated.

“VW is defying the odds and growing earnings while others decrease,” Bernstein Research expert Max Warburton stated in a note on Thursday.

By contrast, Daimler’s adjusted operating profit had dropped 30 percent in the first quarter, Metzler analyst Juergen Pieper stated.