Business Briefs
May 7, 2003
VW Q1 earnings plunge over 60 percent
Europe’s largest carmaker, Volkswagen AG, said on Wednesday pre-tax earnings dropped to €331 million ($377 million) from just under a billion a year ago in the first three months of the year. VW said profits were hit by the weak U.S. dollar and heavy spending launching new car models. “Major factors impacting on operating profit were the model ramp-ups, involving higher start-up costs and upfront expenditures, as well as negative effects from exchange rate movements,” Volkswagen said in a statement. The company said it still expected operating profit to improve substantially over the year in the course of the year as its new Touran, Touareg and Golf V models increase unit sales.
Manufacturing orders fall
German industrial orders plummeted 3.9 percent month-on-month in March amid unusually low demand for big-ticket items, the Economics Ministry said on Wednesday. A survey of economists by the Reuters news agency had a consensus forecast for a monthly decline of only 1 percent. The decline was led by a 5.6-percent decline in domestic orders but foreign orders were also down 2 percent. The export-led German economy has been heavily dependent on demand from abroad in recent months. Orders are an important indicator of future economic developments because they gauge demand for German goods.
Mobilcom to sell UMTS network
Beleaguered German telecom Mobilcom is expected to sell its third generation wireless, or UMTS, network to rival operator E-Plus for around €20 million ($22.9 million), according to press reports. Mobilcom has invested over a billion euros in its UMTS transmission facilities, which include around 3,600 antenna sites and equipment. Mobilcom executives reportedly said the small amount they'll receive from E-Plus is better than simply dismantling the third generation network. The company's UMTS license is likely to be returned to the state without any compensation. Mobilcom originally paid some €8 billion for the UMTS rights. The German firm dropped its bid to provide 3G services after a bitter dispute over costs with its partner France Telecom.
Compiled with material from wire services.