Volkswagen Group said it has set aside another 2.2 billion euros ($2.4 billion) for costs associated with its diesel-rigging scandal as the company announced that first-half earnings rose 7 percent to 7.5 billion euros ($8.25 billion).
Including the one-off items, earnings dropped 22 percent to 5.3 billion euros, VW said in an unscheduled statement today.
The additional provisions arise chiefly from legal risks in the U.S. associated with the company's diesel-rigging scandal and increase the total costs of the scandal to more than 18 billion euros ($19.8 billion).
VW said the improvement in operating performance was driven by its mass-market VW brand, its largest by sales, and helped by rising European car sales, cost cutting and a return of orders from large corporate fleets.
The earnings figures showed VW's operations were recovering even as the company continues to wrestle with legal fallout from the scandal.
Juergen Pieper, a Frankfurt-based analyst at Metzler Bank, said the numbers show a "historic record result in the second quarter, and that's just spectacular considering the headwinds VW faces with declining revenues and all the woes triggered by the diesel scandal."
Said Pieper: "Efficiency gains at the VW brand seem to be the key driver, and the speed at which this industrial behemoth is changing to achieve this is remarkable."
VW did not provide quarterly figures ahead of the full earnings report due on July 28.
VW stuck to its target for an operating return on sales between 5 percent and 6 percent this year, with revenue down by as much as 5 percent. It said tough economic conditions, particularly in South America and Russia, and volatile exchange rates remained challenges.
VW admitted in September it installed illegal software that deactivated pollution controls on more than 11 million diesel vehicles worldwide. It has already set aside 16.2 billion euros to pay for technical fixes for cars that violate clean air standards, buybacks of vehicles and legal costs.
The attorneys general for New York, Maryland and Massachusetts announced lawsuits Tuesday alleging that the cheating stretches back as far as 1999 and that top executives were aware, undercutting Volkswagen’s explanation that the deceit was the work of a small group of employees.
The state lawsuits were a blow after VW reached a crucial milestone last month by hammering out a $15.3 billion settlement with U.S. authorities. CEO Matthias Mueller also presented a strategy for emerging from the crisis by pushing the development of electric car and self-driving features and investing into ride-sharing and other services.
Volkswagen has resisted calls from consumer groups and politicians to compensate about 8.5 million affected European customers.
The automaker is in the midst of a cost-cutting drive across the group aimed at making billions of euros of savings, with a particular focus at its namesake brand, whose profit margins have long lagged rivals such as Toyota.
Analysts have said much could depend on ongoing talks between management and unions over the future of German plants, with VW's powerful unions pushing for fixed quotas on production, investment and output that could limit savings.
Reuters and Bloomberg contributed to this report