FRANKFURT -- Volkswagen, Europe's largest carmaker, reported better-than-expected first-half results on Friday and reaffirmed its forecast of higher pretax and operating profits this year, after special items.
Operating profit for the first six months rose 62 percent to 1.38 billion euros and compared with an average forecast of 1.11 billion euros given in a Reuters poll of analysts.
Earnings before tax, which includes contributions from two Chinese joint ventures, rose by only 5.2 percent to 672 million euros.
But operating profits at its core automotive division more than doubled to 871 million euros while free cash flow at the division improved to 658 million from 270 million euros.
The division's second-quarter operating margin rose to 2.8 percent from 1.14 percent a year ago.
The Wolfsburg-based company also said it was confident of reaching its 3.1 billion euros in targeted gross earnings improvement this year through its "ForMotion" efficiency program, a portion of which though will consist of sustainable improvements made last year.
For the coming three years, Chief Executive Bernd Pischetsrieder has targeted a 4 billion-euro net improvement in pretax profits by 2008, driven by a 7 billion-euro gross increase at its loss-making VW brand alone.
Shares in Volkswagen have outperformed the DJ Stoxx European autos index by nearly 10 percent in the year to date, helped by speculation that a recent bribery scandal that engulfed the company could help lead to a change in its cozy corporate culture.