27 Feb 2010

VW profits drop sharply

7:09 am on 27 February 2010

Volkswagen has reported a fall of 80% in profits for 2009 partly due to a fall in profit margins.

The company made a net profit of 960 million euros ($US1.31 billion) last year, but said it expected operating profit and sales to recover this year.

Sales slipped by 7.6% in 2009, but the company retains its ambition to become the world's biggest car maker.

Despite the sales drop, VW benefitted from car scrappage schemes. It is also doing well in China, which is now its biggest market.

Earlier this month, VW said it would buy a 20% stake in Suzuki Motor for 222.5 billion yen ($US2.5 billion). Suzuki said it would take a stake in VW in return.

Volkswagen is also in the process of buying Porsche. It plans to issue up to 135 million new preferred shares to fund the purchase.