FRANKFURT -- Volkswagen Group has set aside 5.5 billion euros ($6.16 billion) in contingent liabilities to cover possible risks arising from a diesel cheating scandal, CFO Frank Witter said on Thursday.
With the release of quarterly earnings on Thursday, VW revealed it had set aside 1 billion euros in risk provisions to help pay for the diesel emissions cheating scandal, boosting the overall cost of the diesel emissions violations to 30 billion euros.
In addition, VW has set aside 5.5 billion euros in contingent liabilities of which 3.4 billion euros has been earmarked to cover potential lawsuits, Witter said.
In 2015, VW was caught using illegal engine control software to cheat U.S. pollution tests by masking excessive levels of nitrogen oxide pollution coming from its diesel cars.
Q1 results
Meanwhile, sales of SUVs and cost-cutting helped Volkswagen meet first-quarter operating profit forecasts.
Earnings before interest and taxes (EBIT) fell to 3.9 billion euros ($4.37 billion) from 4.2 billion a year earlier, VW said, but the result was in line with the 3.92 billion euros expected by analysts.
Analysts praised Volkswagen's strong EBIT result at a time when other automakers and suppliers have been cutting their outlooks.
"The comparison to other companies such as Daimler, which posted a 30 percent drop in adjusted operating profit, is impressive," Metzler analyst Juergen Pieper said.
VW said it expects its return on sales for its passenger-car business to be at the lower end of its 6.5 percent to 7.5 percent margin target for the year, but analysts were impressed that VW reiterated the goal.
Volkswagen also stuck to its forecast of higher unit sales and revenue growth of up to 5 percent this year.
Ongoing supply bottlenecks caused by difficulties getting cars certified to meet stricter European emissions tests, as well as economic weakness in China, South America and Russia, and legal issues, pose risks to VW Group's business, the company said.
Meanwhile, VW said the 1 billion euros set aside for emissions settlements were not related to German charges filed last month against former CEO Martin Winterkorn and four other VW executives who are accused of fraud for failing to report systematic emissions cheating in 2015.
The automaker's car sales fell 3 percent to 2.55 million vehicles during the quarter, with demand for the VW brand down 4.5 percent, but improvements in pricing and higher sales of SUVs helped.
VW's profitable luxury brands Audi and Porsche saw sales drop 3.6 percent and 12 percent, respectively. VW's Bentley unit reversed losses, the automaker said.
