Volkswagen Group returned to profitability in the third quarter, helped by a surge in demand in China, despite an overall drop in global vehicle deliveries during the COVID-19 pandemic.
Operating profit before special items was 3.2 billion euros ($3.8 billion), rebounding from a loss in the second quarter, the company said in a statement on Thursday.
Adjusted operating return on sales in its automotive division fell to 5.4 percent from 7.4 percent in the year-earlier quarter, but rebounded from minus 5.8 percent in the second quarter.
The company benefited from a series of cost-cutting measures launched earlier this year to counter the effects of the pandemic. The cost cuts “had as much of an impact as the continuing improvements in the situation in key sales markets,” VW said.
VW benefited from its large footprint in China, its biggest market, where deliveries between July and September were up 3 percent on the prior-year period. Globally, the number of vehicles delivered to customers in the third quarter fell 1.1 percent, compared with the same quarter in 2019.
Global deliveries rose 3.3 percent in September, exceeding the level of the same month in 2019 for the first time this year, VW said.
Sales revenue between July and September fell 3.4 percent to 59.36 billion euros.
VW said its net liquidity in the third quarter improved to 24.8 billion euros, up from 18.7 billion at the end of the second quarter.
VW had posted a loss of 1.7 billion euros in the second quarter as it was hit hard by a drop in demand caused by the pandemic, which led to restrictions on movement, economic crises and swathes of job losses globally.
In a note to clients, Jefferies analyst Philippe Houchois described VW’s third-quarter results as a “solid performance with strong cash but relatively muted in the context of the auto sector recovery.”