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Tuesday, February 23, 1999 Published at 21:10 GMT

Business: The Company File

Car giant's bumper profits

The new face of a stalwart of VW's trade, the Beetle

Europe's largest car manufacturer, Volkswagen, has reported a massive jump in profits.

Its coffers have swelled with its profits after tax shooting up by 65% during 1998.

The news comes after VW launched into the US market some months ago a new version of its much-loved Beetle car.

Initial demand was reported to be huge as car dealers struggled to satisfy the number of customers turining up on their forecourts.

VW gloom

But Volkswagen dampened its good news with a warning that global economic difficulties will make it tough to beat this figure this year.

It made 2.24bn DM($1.26bn/1.15bn euros) up from 1.36bn DM($767m/697m euros) in 1997.

Details of the year's profit will be presented at a news conference on 25 March.

"The 1998 figures were absolutely fine. The results are a bit off the point now. What's important is the warning that it will be difficult to achieve a further improvement in earnings in 1999," said Stephen Reitman, an analyst at Merrill Lynch, in London.

"I think they are taking a hyper-cautious view," he added. "We know that their incoming orders are in pretty good shape, except with markets like Brazil and the Czech Republic."

"A further improvement in group net profit in 1999 will be difficult to achieve given the crises in the global automobile markets," Volkswagen said in a statement.

The company said it would pay a higher dividend on shares, paying 1.5 marks per share ($0.85 /0.77 euros) compared to 1.2 marks ($0.68/0.62 euros) this time last year. Pre-tax profits were up 63.4% at 6.287bn DM.

Car sales were 18.5% higher at 134.243bn DM.

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