VW returns to the black: Car maker promises full-year break-even in domestic operations

VOLKSWAGEN, Europe's biggest car manufacturer, returned to profit in the third quarter, again promising that it would break even in its domestic operations for the full year, despite a nine-month loss of DM768m ( pounds 318m).

The overall group loss for the first nine months was DM1.5bn, compared with a DM549m profit in the same period of 1992.

In an interim report, VW, which is chaired by Ferdinand Piech, said third-quarter group net profit was DM70m compared with DM104m a year earlier.

VW's shares closed just over DM3 up, at DM395, on the Frankfurt exchange.

In the nine months to September, VW reported group sales falling to DM56.4bn from DM63.6bn a year earlier. Nine-month sales in Germany dropped 25 per cent to 685,568 vehicles from 913,257 a year earlier. Production in Germany declined by 30 per cent to 1.022 million vehicles in the first nine months.

VW's share of the market slipped in the first nine months of 1993 to 16.4 per cent from 17.5 per cent a year earlier. The company said it did not expect 'any significant revival of demand' for cars in Germany in the coming months, while weakness outside Germany was also expected to persist. VW's worst performance was in the US, where deliveries plummeted 45 per cent in the first nine months.

Siemens, Europe's largest electrical engineering group, reported better-than-expected net profits up slightly to DM1.98bn in the year ending 30 September, from DM1.96bn in 1991/2. It announced an unchanged dividend of DM13. The company said that although earnings in its industrial divisions had dropped, this was compensated for by higher returns on its substantial financial holdings.

Group sales climbed to DM82bn from DM78.5bn in 1991/2. The weak Siemens Nixdorf computer division narrowed its losses to DM419m from DM513m in 1991/2.

Hoechst, Germany's biggest chemicals concern, announced a dividend cut after reporting a 40 per cent drop in nine-month group pre- tax profits to DM924m. In the third quarter alone, Hoechst's group earnings fell 65 per cent to DM143m. The parent company made a loss on core operating activities in the nine-month period, and described the outlook for the rest of the year as bleak.

The size of the dividend cut will depend on business developments into the first quarter of 1994, Hoechst said. Group sales in the first nine months slipped to DM33.7bn from DM 34.2bn a year earlier.

The German Chemical Industry Association yesterday issued a grim forecast, saying that, with 1993 being the 'most difficult year since the war', all the pointers suggest that 1994 will also not be a good year. 'Even if volumes improve slightly, sales and above all profits will remain very unsatisfactory,' the association said.

Chemicals production was down 4 per cent in the first nine months of 1993, while pharmaceuticals production dropped by more than 5 per cent.

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