Frankfurt - German carmaker Volkswagen said on Thursday net income for the third quarter plunged 86% as the global economic downturn affected demand for its cars and trucks.
Europe's biggest automotive group by sales reported net income of €172 million ($253m), down from €1.2bn in the July-September period a year ago.
VW, based in Wolfsburg, said sales for the quarter fell 10% to €26bn from €29bn in the third quarter of 2008.
The company said full year revenue would be lower than in 2008. Rising refinancing costs and the deterioration of sales for some brands would drag on the company's earnings. VW said it would attempt to counter the trend with cost and investment management and better efficiency.
In a company presentation after the results, Hans Dieter Poetsch, VW's CFO, said the company did expect to post a profit for the full year 2009, but warned that times were still difficult.
"We predict no substantial global recovery in 2010," he said, noting that government scrapping schemes would stop and demand was otherwise weak in most regions.
Poetsch said the company started its integration process with the German sports car maker Porsche, which the company hopes to conclude in full by 2012.
He said the integration measures with Porsche would "speed the emergence of the world's most profitable autos company".
Shares of VW were about 1% higher near 111 in Frankfurt afternoon trading.
VW said it would also continue to exploit opportunities on the market. Earlier this week, Volkswagen confirmed it was considering making an offer for bankrupt German contract automaker Karmann, which made the classic VW Karmann Ghia two-seater from the 1950s to the 1970s. Volkswagen, however, did not mention Karmann in its reports on Thursday.
"The Volkswagen group is holding its own extremely well despite the adverse conditions," Martin Winterkorn, the chief executive said in the company's report.
"While the global market is contracting by 12%, we are recording stable delivery levels. This proves that - even in difficult times - we are well positioned with our multi-brand strategy."
Volkswagen's brands include Audi, Lamborghini, Seat and Skoda. It is also a major shareholder in MAN and Scania AB, two of Europe's biggest truck builders.
Nine-month net income fell 81% to €719m and group revenue fell nearly 10% to €77.2bn.
Brands bashed
The VW brand cars division saw revenue fall 16% to €47.5bn in the first nine months. Revenue at Audi fell 15% to €22bn.
Despite the drop in revenue and earnings, the company said it saw comparatively strong demand for its products. Worldwide deliveries in the first nine months of the year were almost unchanged from the year-ago period, while the overall passenger car market fell 12%.
China reported a 37% increase in nine month deliveries, while Brazil booked a 6.4% increase.
German deliveries in the January-September period were 21% higher largely due to the country's car scrapping programme.
However, overall deliveries in Europe fell nearly 9% in the January-September period.
North America showed a near 9% decline in January-September deliveries.
"VW has many attributes, including an enviable balance of mainstream and premium brands, wide geographical exposure and industry leading technology," Max Warburton at Bernstein Research said in a note to clients.
"We continue to see the company as well placed and well capitalised. We maintain our 75 price target and 'Market Perform' rating," Warburton said.
- AP