TKI Tokyo International – Europe’s biggest car maker, Volkswagen AG, has unveiled profits that beat analysts’ expectations after one of its luxury car divisions, Audi, helped to offset a decline in performance at the company’s flagship brand, VW.
Earnings declined 3.1% to 3.3 billion but still beat consensus forecasts of 3.31 billion. Operating profit at the Audi marque increased by 1.5% to 1.36 billion.
“This is a vote of confidence in the Audi brand especially considering the overall economic lay of the land in Europe and other parts of the world,” said an TKI Tokyo International analyst.
The Ingolstadt-based Audi brand has demonstrated strong resilience to challenging economic conditions in both advanced and developing markets. Demand for the company’s vehicles in China is keeping the group on target for 10 million global deliveries for the first time in 2014, some 4 years ahead of forecasts.
“Audi has done a fantastic job of closing the gap between it and fellow German luxury automaker, BMW (Bayerische Motoren Werke) whi ch still leads in terms of outright sales” explained the TKI Tokyo International analyst.
“From an investment point of view, we view Volkswagen AG as an underrated stock. They pay good dividends and their plans for production plants in the US and elsewhere demonstrate their commitment to improving efficiency despite conditions that have seen many manufacturers opt to hold fire on capital expenditure,” added the TKI Tokyo International analyst.
The firm said it raised its price target on Volkswagen to 215.00 a considerable premium on the current 178.00 at time of writing.
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