Demand for 4x4s drives Volkswagen profits up to €11.3bn

Volkswagen, Europe’s largest carmaker, reported record 2011 profits as demand increased for Audi and VW 4x4s.

Earnings before interest and taxes advanced 58% to €11.3bn, the Wolfsburg, Germany-based carmaker said yesterday. Profit matched the €11.3bn average estimate of 22 analysts surveyed by Bloomberg. Revenue gained 26% to €159bn.

Chief executive Martin Winterkorn is adding factories in a bid to surpass General Motors as the world’s biggest carmaker. VW, which delivered a record 8.27m vehicles in 2011, aims for sales growth this year, outpacing the market’s expansion.

Volkswagen has expanded production of 4x4s such as the VW Tiguan and Audi Q5 to meet high demand in the US and China, its largest market.

“There’s not a real positive surprise, so there might be some disappointment,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler.

“The quality of the earnings is probably better, but more explanation is needed.”

Volkswagen raised the dividend for 2011 by 35% to €3.06 per preferred share from €2.26 a year earlier. The dividend per common share for last year will be €3.

The carmaker will release more details on 2011 earnings on Mar 12.

Future growth may also come from pending mergers. VW is exploring options to combine with majority shareholder Porsche, after scrapping plans last year for a merger because of legal tangles.

To avoid further delays, VW may drop the full merger and instead buy Porsche’s carmaking business, two people with direct knowledge of the situation said in November. VW already owns 49.9% of Porsche’s automaking business and holds an option to purchase the remaining 50.1%.

Volkswagen’s 2011 net income was lifted by a gain from the revaluation of the Porsche options. The figure more than doubled to €15.4bn from €7.23bn.

Investments in property, plants and equipment in 2011 rose 40% to €7.93 billion, VW said.