UDPATE: 4:00 a.m. EDT — Volkswagen reported a 3.4 percent year-on-year drop in first quarter revenue Tuesday. In the three-month period ending March, revenue came in at 50.96 billion euros ($56.7 billion), down from 52.7 billion euros and below the 51.7 billion euros forecast by analysts.
The carmaker also reported a 19 percent drop in net profits in the quarter as the figure came in at 2.37 billion euros, down from 2.93 billion euros in the same quarter last year.
“In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016,” Volkswagen CEO Matthias Müller said, in a statement. “In the first quarter, we once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions.”
The company's stock fell 2.6 percent after the results were announced in early trade on the Frankfurt Stock Exchange.
German carmaker Volkswagen AG, still reeling under the effects of last year’s massive emissions scandal, will report its first-quarter earnings Tuesday. Analysts polled by Reuters expect the company to report earnings of 3.67 euros ($4.1) per share, down from 5.8 euros per share reported in the year-earlier period.
First-quarter revenue is also expected to take a hit, and drop 1.8 percent year-on-year to 51.7 billion euros from 52.7 billion euros. Pretax profit is forecast to decline to 3.27 billion euros from 3.97 billion euros in the year-earlier period.
After the automaker admitted last year that it had affixed its cars with “defeat devices” — software that could detect when the vehicles were being tested for emissions and deliver false data — it had to set aside nearly $18 billion to cover fines and litigation expenses.
The scandal hit the company’s 2015 bottom line, when it reported a full-year net loss of 1.58 billion euros — compared with a net profit of 10.85 billion euros in 2014 — and also forced its CEO Martin Winterkorn to step down.
In recent months, however, the company’s car sales have shown signs of recovery, boosted primarily by the performance in China and Europe. In the first quarter of 2016, for instance, the automaker sold 2.51 million vehicles worldwide, with Western Europe and China accounting for over 1.85 million vehicles sold in the period. Its sales in the first three months of the year also topped those of its rival Toyota, which delivered 2.46 million vehicles globally.
On Monday, Volkswagen’s shares in Frankfurt closed up 0.93 percent. Although the company’s shares plunged precipitously last year after details of the emissions cheating scandal emerged, they have since pared their losses.
Year-to-date, Volkswagen shares are down 0.67 percent, outperforming the broader market index.
“It will take years to recover, in terms of the stock price, sorting out all the fines, and the reputation. Analysts are struggling to assess what the damage actually is, as there's still a steady corrosive drip-drip of news,” Mike Ingram, a market analyst at the financial services company BGC Partners, told Reuters. “Yes, they've bumped up their provisions, but you have to wonder whether they're prepared for a moderately bad outcome, let alone a ‘worst-case’ scenario.”