German automaker Volkswagen saw its profit drop by half in the July-September period due to expenses for fixing and buying back diesel cars in the United States, but otherwise had what it called a "strong third quarter" and raised its earnings outlook for the full year.
Profit after tax fell to 1.14 billion euros ($1.33 billion) from 2.33 billion in the same quarter a year earlier. Based in Wolfsburg, Volkswagen had announced Sept. 29 that it would take around 2.5 billion euros in additional charges for complying with a settlement with U.S. authorities over diesel cars it had rigged to cheat on emissions tests.
Sales revenues, however, rose 5.8 percent to 55.0 billion euros. The company said the operating margin before special items will be "moderately higher" this year than the original 6-7 percent.
Chief Financial Officer Frank Witter said that the diesel issue was nowhere near an end. Volkswagen admitted to equipping cars with software that turned diesel emission controls on during testing and off during everyday driving. Some 11 million cars worldwide were affected.
Witter said the company's performance over the first nine months of the year "makes us quite optimistic about the year as a whole." Despite cash outflows for the diesel scandal the company's automotive business still had an "adequate financial cushion" of 25 billion euros in cash.
Volkswagen will need its cash pile as it and other automakers sink billions into new technologies and approaches to getting from one place to another, including autonomous and electric vehicles and the practice of ordering transportation services through smartphone apps.