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Volkswagen 2006 commercial-vehicle profit rises 5.4%

Volkswagen AG, Europe's biggest carmaker, said its commercial-vehicle unit's 2006 profit rose 5.4% to a record as sales of new models increased and labor costs fell.

The division forecast further growth in 2007. Earnings before interest and tax increased to €100.8 million ($133 million) from €95.6 million in 2005, Stephan Schaller, head of the unit, said at a press conference at the division's Hanover, Germany, headquarters today. Sales rose 14% to €8.34 billion.
The division returned to profit in 2005 by reducing workforce costs and boosting productivity. The unit, which accounts for about 10% of group sales, helped Wolfsburg, Germany-based Volkswagen AG more than double 2006 profit. Commercial-vehicle sales have gained in the first two months of this year, the division said today, without providing figures.
Schaller said a possible option for combining with competing truckmakers MAN AG and Scania AB would be folding Volkswagen's entire commercial-vehicles unit into the new company. „There are many thinkable variations and that is one of the options,” Schaller told reporters. Volkswagen, the largest shareholder in both Munich-based MAN and Soedertaelje, Sweden-based Scania, is pushing for a three-way combination between the companies. In the past, Volkswagen has said it would like to fold its Brazilian heavy-truck unit into any alliance.

Commercial vehicles that Volkswagen plans to introduce in 2007 include a pickup truck to be sold in Europe and the southern hemisphere. The division last year began selling a van called the Crafter, a successor to the LT model. Volkswagen introduced a new version of the Caddy van in 2004. The division's main factory in Hanover will also build 1,100 vehicles a day for Porsche AG when production of the sports-car maker's Panamera model begins in 2009. Porsche, Volkswagen's largest shareholder, has been seeking ways to increase projects between the two companies.
Schaller, making his first major presentation to journalists as head of the commercial-vehicle division, forecast „a significant increase” in 2007 operating profit. He has succeeded Bernd Wiedemann who retired at the end of last year. Vehicle sales at the division last year rose 10% to 441,700 units. The division booked charges last year of about €1 billion to pay for product development and introduction costs for models such as the Crafter.
The division's workforce declined 3.7% from a year earlier to 19,400 employees as of the end of 2006. The Hanover plant increased productivity by 8%. Volkswagen said February 20 that 2006 group net income more than doubled to €2.75 billion from €1.12 billion because of new car models, a tax gain and the disposal of a vehicle-rental division. The carmaker is scheduled to release detailed figures for last year on March 9. (Bloomberg)