UPDATE 2-Volkswagen beats forecasts with Q3 op profit

* VW says business growth won’t continue as strongly

* Q3 oper profit 1.99 bln eur vs Reuters poll avg 1.24 bln

* No seasonally usual deterioration from Q2 to Q3

* Automotive net cash grows to 19.64 bln eur at end-Sept

* VW shares up 3.2 pct at 96.76 euros, index up 1.1 pct

(Recasts adding analysts, details)

By Christiaan Hetzner

FRANKFURT, Oct 22 (BestGrowthStock) – Volkswagen (VOWG_p.DE: ) beat
all forecasts with a huge jump in third-quarter operating profit
to 1.99 billion euros ($2.77 billion), thanks to a rebound in
demand that reduced the need for rebates.

The operating profit in the seasonally weak quarter was
identical to that posted in the seasonally strong second-quarter
— something almost unheard of in the auto industry.
[ID:nLDE69L0Q8]

“VW just delivered the highest absolute level of Q3 profits
in its history and one of the highest ever margins achieved in
any quarter,” Bernstein analyst Max Warburton wrote in a
research note.

Shares in Europe’s largest carmaker traded up 3.18 percent
at 96.76 euros by 1628 GMT, easily outperforming the European
auto index (.SXAP: ), which was up 1.1 percent.

Nevertheless, Volkswagen warned the trend would not hold.

“The successful business growth of the Volkswagen Group in
the first nine months of 2010 will not continue as strongly in
the fourth quarter,” the company said in an unscheduled
statement published on Friday.

Analysts dismissed the company’s downbeat guidance for the
fourth quarter as overly conservative.

“The only thing I would criticise is the far too cautious
guidance. When they write that the fourth quarter will be weak,
I would almost be inclined to forget this entirely based on past
experience,” said Metzler Bank’s Juergen Pieper.

The company’s war chest surged to a dizzying 19.6 billion
euros in net cash by the end of September as revenue grew much
faster than investments thanks to a rebound in demand that
severely reduced the need to offer margin-eroding rebates.

“VW is generating enough cash to buy Alfa Romeo once a
quarter, to buy PSA (PEUP.PA: ) every year and may soon have the
funds to take out MAN and Scania in their entirety (…) VW can
afford to do almost anything,” Warburton wrote.

FOREX BOOST

On a pretax basis, earnings were even better thanks to
income generated by its financial stakes in companies like MAN
(MANG.DE: ), Porsche AG sports cars and its joint ventures in
China, as well as the valuation of an option to buy the
remainder of Porsche AG.

“We believe that the group’s sales revenue and operating
profit in 2010 will continue to perform positively, despite
shifts in volumes between the markets,” it continued, adding
that exchange rate effects would give profits a boost.

A Reuters poll forecast an average operating profit of 5.23
billion euros for the full year — an amount that at VW’s
current rate could be easily achieved by the end of this month.

VW will post full-quarterly results and hold a conference
call with analysts on Oct. 27.
(Reporting by Christiaan Hetzner; Editing by Sharon Lindores)
($1=.7187 Euro)

UPDATE 2-Volkswagen beats forecasts with Q3 op profit