Volkswagen Seeing a Higher 2008 Profit

It should be noted that last year Volkswagen has shed 6% off its workforce and reached a five-day week agreement with its German workers. Europe’s largest automaker and maker of Volkswagen tail lights, is planning to roll out 28 new models of which includes a new version of the Golf which would hopefully drive sales growth up.

According to Martin Winterkorn, “Innovative products, competitive costs, productive processes and an aggressive position in the markets will enable us to put the company on an even better footing and demonstrate that we are well equipped to master the future.”

Volkswagen is also expecting for a 2008 pretax of at least 5.1 billion euros or $6.7 billion USD. The German-based automaker also said last month that it gained in 1.79 billion euros in profit before tax from its 2006 operations. But according to analysts by Thomson Financial, the 2008 pretax profit for Volkswagen will reach 4.83 billion euros only.

Last Friday Volkswagen shares have increased by 2.7% in late afternoon trading. In the year 2006 VW’s operating profit before special items have improved by 52% to 4.4 billion euros and after increasing selling 9% more than last year and add to it the significant reduction in its production costs.

Hans Dieter Poetsch, Volkswagen CFO said during the annual conference, the 2006 profit growth was the result of the euro climbed against the Japanese yen putting it in a “massive competitive disadvantage” against the like of Toyota Motor. He also stated that the 2007 operating profit before special items will rise, stressing the fact that the company has already sold 8% more vehicles just for the first two months of this year compared to the same period in 2006.

Europe’s largest automaker has also said that revenue will improve more than the 12% growth or 105 billion euros that company has obtained last year. Volkswagen will focus on building its market in Russia and India for this year. Actually such forecast was made during the time of former VW CEO Bernd Pischetsrieder whom Chairman Ferdinande Piech pressured to step down. He was replaced by Martin Winterkorn who is known as the favorite protégé of Chairman Piech.

After the ousting of Pischetsrieder, Piech have collaborated with his union allies that sits on the supervisory board to employ cost-cutting measures which many analysts sees won’t be sustainable.

Ferdinand Piech is undeniably one of the most powerful people in Volkswagen. And aside from VW, Piech also holds most of Porsche which in turn has the biggest stake owned at VW reaching 27%. Even with such large amount of shares at Volkswagen, Porsche just can’t exceed 30% control of VW without making first a bid for all of the company.

Before Porsche has finally increased its stakes at VW various speculations of a takeover were coming out but since the Lower Saxony—Volkswagen’s second largest automaker has said that it would act in support of Porsche. Volkswagen has also been pressuring its two partly held truck makers, Scania and MAN AG to merge.