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Tuesday, 19 February, 2002, 16:49 GMT
Volkswagen profits rise
Volkswagen's Beetle
New Beetle is still popular
Europe's biggest car maker Germany's Volkswagen has reported a hefty profit rise, broadly in line with investor's expectations.

The company's net profits were, at 2.9bn euros ($2.5bn, 1.8bn), 12% higher last year than those in 2000.

Sales rose 5.5% to 88.5bn euros.

"The results look to be encouraging, net profit came out at the top end of the forecast range " said Adam Collins, an auto analyst at Schroder Salomon Smith Barney.

VW's profit's rise is below that recorded by French rival Peugeot Citroen's 29%, but higher than achieved by many other motor companies.

Falling market

In a striking contrast to struggling US producers, notably Ford, European car giants posted comparatively healthy results for the past year.

Facing lowered demand, VW cut its production by almost 1% to 5.1 million vehicles.

The company is struggling alongside other large volume car producers to prosper in European and US markets.

The firm was also hit last year by the financial crisis in Argentina and a two-week strike at one of its main global plants in Brazil.

Shares in VW stood down 1.6% at 50.8 euro on Tuesday.

VW shares have typically traded at a discount to those of rival firms largely because of a wariness among investors, and concerns over the firm's close links to the German state of Lower Saxony, which effectively has a blocking minority of 20%.

Volkswagen is expected to have a tough 2002.

Challenges ahead

A new chief executive, Bernd Pischetsrieder, takes over from incumbent Ferdinand Piech in April.

And the company is seeking to reorient its brands, which include Audi, Skoda and Seat, to avoid competing against itself.

Investors have urged VW to sell-off the loss-making Swedish truck-maker Scania and launch a cost-cutting programme.

See also:

23 Nov 01 | Business
VW shakes up its brands
21 Nov 01 | Business
Volkswagen workers accept pay cut
12 Nov 01 | Business
Volkswagen faces Brazil strike
10 Sep 01 | Business
Ford 'prepares bid' for VW
07 Sep 01 | Business
VW chooses new chief
05 Sep 01 | Business
VW changes course
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