Volkswagen shares soar after buoyant earnings update

Volkswagen shares have soared after the German vehicle giant revealed that its first-half earnings before charges related to its diesel-emissions scandal were “significantly higher” than market expectations.

That is up from last year’s 7 billion euro (£5.85 billion) and is largely due to improvements in the performance of the Volkswagen brand in the second quarter, especially compared with the weak first three months of the year.

The group said today that special items totalling €2.2bn “mainly related to further legal risks predominately arising in North America” had been included in the first half results, leaving its operating result after special items at €5.3bn.

VW admitted past year to installing illegal software disguising the level of emissions from its diesel cars.

It has already set aside €16.2bn to pay for technical fixes for cars that violate clean air standards, buybacks of vehicles and legal costs.

The announcement, before full half-year figures on July 28, marked rare spot of good news for the auto maker, which has been embroiled in a diesel emission scandal.

Last month, VW agreed to a record $14.7-billion payout to settle civil claims in the United States, but it is still a long way from drawing a line under the scandal.

On Tuesday three U.S. states – New York, Massachusetts and Maryland – said they had taken legal action against VW in the wake of the carmaker’s emissions scandal.

In a slew of other lawsuits worldwide, Spain recently charged VW with fraud and damage to the environment.

Analysts suggest the final cost of the affair could rise to 20-30 billion euros.

Full half-year results were scheduled to be published on July 28.

The company said it still expected 2016 sales revenue to decline as much as 5% from 2015, and an operating return on sales of 5% to 6%.

At 0950 GMT, Volkswagen (VW) shares were up 5.1 percent at 122.35 euros. He estimated that the Volkswagen brand’s pretax profit margin rose to 3% in the second quarter of 2016, beating forecasts of a 2% margin. “Despite “Dieselgate”, VW reported the best quarterly operating profit ever”, said DZ Bank analyst Michael Punzet.