Volkswagen reports record 2011 profit on high-margin SUV sales

Bloomberg News (Berlin) - Volkswagen AG, Europe's largest automaker, reported record 2011 profit as demand increased for Audi and VW brand sport-utility vehicles.

Earnings before interest and taxes advanced 58 percent to 11.3 billion euros ($15.1 billion) from 7.14 billion euros a year earlier, the Wolfsburg, Germany-based carmaker said in a statement today. Profit matched the 11.3 billion-euro average estimate of 22 analysts surveyed by Bloomberg. Revenue gained 26 percent to 159 billion euros.

Chief Executive Officer Martin Winterkorn is adding factories in a bid to surpass General Motors Co. as the world's biggest carmaker. VW, which delivered a record 8.16 million vehicles in 2011, aims to outpace the sales growth this year of the overall market. VW and Audi have expanded SUV production to meet high demand in the U.S. and China, its largest market.

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

The stock gained as much as 2 euros, or 1.4 percent, to 141.15 euros and was up 0.2 percent as of 10:29 a.m. in Frankfurt trading. The shares have gained 20 percent this year, valuing the carmaker at 60.2 billion euros.

The maker of the Golf hatchback, VW's best-selling vehicle, plans to invest a record 62.4 billion euros over the next five years on plants, models, research and development to underpin its global expansion. VW wants to hire more than 50,000 workers through 2018 as it targets more than 10 million autos per year.

Daimler AG this month forecast that operating profit this year will be "in the magnitude" of 2011's 8.98 billion euros. CEO Dieter Zetsche has vowed to retake the luxury-car lead from Bayerische Motoren Werke AG after slipping last year to third behind Audi. Daimler predicts industrywide auto deliveries will rise 4 percent this year globally.

Future VW growth may also come from pending mergers. VW last year took a majority stake in German truckmaker MAN SE, increasing its holding to 55.9 percent. VW has been seeking closer links between MAN and Soedertaelje, Sweden-based Scania AB, which it also controls, with a goal of forging a three-way truckmaking alliance. Such a tie-up may save as much as 1 billion euros in annual costs, VW has said.

Volkswagen is exploring alternative options to combine with majority shareholder Porsche SE 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 percent of Porsche's automaking business and holds an option to purchase the remaining 50.1 percent from the holding company.

Volkswagen's 2011 net income more than doubled to 15.4 billion euros. Profit was impacted by a gain from the revaluation of the Porsche options.