Volkswagen lowers profit forecast in wake of diesel scandal

Author: The Associated Press

FRANKFURT, Germany (AP) – Volkswagen reported a loss of 1.67 billion euros ($1.83 billion) for the third quarter as the company set aside 6.7 billion euros to cover the cost of recalling millions of cars rigged to evade U.S. diesel emissions tests.

The company warned Wednesday that operating profit would be “down significantly” in response to the scandals. But it stayed with its prediction that unit sales would be on a level with last year’s record 10.14 million.

Company shares jumped 3.7 percent on the announcement in morning trading in Europe.

Volkswagen AG had already announced the charges, so market analysts expected a loss for the quarter. Its result beat analyst expectations for a loss of 2.11 billion euros, as compiled by financial information provider FactSet. Sales revenue rose 5.3 percent to 51.5 billion euros.

Chief Financial Officer Frank Witter said Wednesday the company had “solid and robust” cash resources to meet the financial impact of the emissions scandal.

Analysts say the impact will likely be several times larger than the set-asides, including fines, recall and repair costs, and possible lost sales due to damage to the company’s reputation.

The scandal became known on Sept. 18, near the end of the quarter, so any impact on quarterly sales was slight.

The U.S. Environmental Protection Agency says Volkswagen installed software on 482,000 cars from model years 2009-2015 that disabled diesel engine emission controls when the vehicles were not being tested. Up to 11 million cars worldwide have the deceptive software.

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