Volkswagen is rolling in money. In the first nine months, VW registered an after tax profit of more than €4b ($5.57b). No funky EBITA, no “gains before restructuring charges,” straight bankable after tax profit. That’s six times the €655m the company reported in the same period of the prior year. (While most other car makers reported hefty losses.)
Ever the cautious executives, Volkswagen warned that one should not get used to it, and that the last quarter may not be as rosy as the first three. We shall see. They were always good at sandbagging. The only thing Volkswagen’s Finance Dept. promised was that the operative earnings will be above last year when the year is over, says Automobilwoche [sub].
Duh. That’s easy. In the first nine months of 2009, the operative earnings were €1.5b, this year, the number already stands at €4.8b.
Great.
I hope they continue.
I like VW cars. Have one and would consider another.
But watch out…it might be time the US gov goes after them for something or other.
Right after they have files away Toyota and finished with the upcoming Ford extortion.
With that kinda bank, they could’a afforded more than rear drums on the new Jetta. Just sayin’.
The thing is, an earlier report indicated that most, if not all of VW’s profits are coming from their luxury to exotic brands due to demand from China, India, the Middle East, etc.
VW operations are doing little better than breaking even in most markets (aside from China) and are in the red in the US.
You know who else had a profitable nine months in Germany?
Hitler.
Wow, I sure didn’t see that Godwin coming.
Jeez. So quick. Do we need to invoke Godwin’s law?
I usually have other associations in conjunction with “9 months” but to each his own.
He also loved drum brakes.
Let’s hope and pray that VW won’t use the money to buy Alfa Romeo…
The financial geniuses at TTAC are killing me. Criticize GM’s financials and the pour the love over VW. Do any of you realize that VW’s financial statments are measured in IFRS while the US manufacturers are measured in US GAAP.
These two different accounting standards can produce materially different results. Before you conclude that VW is “raking it in” you might want to actully understand the yard-stick (meter-stick?) they are being measured with.
I haven’t done the analysis yet, but it is way to early to conclud that VW is raking it in. And I have worked for a German compnay before. Under previous German accounting rules companies could make a “profit accrual.” Basically it meant they can save current profits for future years. Under IFRS they can no longer do this, but old habits die really hard!!!
If you have worked for a German company, then you know that a German company only reports profits if it absolutely has to, and when other measures of hiding profits (accruals, Rückstellungen, for possible later payments are one) or delaying taxes are completely exhausted. (Maybe the sneaky Germans didn’t let you in on their secrets.)
Reporting a loss once in a while is the norm, because it helps you recoup previously paid taxes. The German stock market knows this and it reacts blase. When VW reported the monstrous after tax gain, the stock dropped. The market views paying taxes as wasteful.
1) Design a range of generally acceptable cars
2) Avoid shelling out major dough for complete redesigns as long as possible. Instead…
3) Keep updating existing cars with newly designed light units
4) ????
5) Profit
Don’t forget to add that millions can be saved by denying claims for parts that fail due to poor design and blame the customer instead.
4) cutesy ads that remind Americans that VWs use authentic German engineering
Bertel,
No “D” in German GAAP?
In the USA ’tis either EBITDA or EBITDAA that is scrutinized.
My personal metric is that all that matters is what you get to keep, but accountancy is one of the dark and evil arts…