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Volkswagen says its brands improving, led by VW, which turned profit in Q1

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FRANKFURT, Germany (AP) _ Volkswagen AG said Wednesday its flagship VW brand swung to an operating profit in the first quarter and earnings from its premium Audi brand rose 16 per cent as the company broke out unit results for the first time.

It marked a new approach for Europe's biggest automaker and bore the imprint of new chief executive Martin Winterkorn's hand in changing how the company is structured.

``The good market acceptance of our attractive models and the sustained benefits of our cost and process optimization programs are reflected in the figures for the individual brands,'' said Volkswagen chief financial officer Dieter Poetsch. ``All group brands improved their operating profit.''

VW reported a 386 million euros (US$525.2 million) operating profit in the first three months of the year compared with a loss of 49 million euros a year ago. The increase came as demand for new models and old favourites _ the CrossGolf, CrossTouran, Polo and others _ increased steadily across Europe, South America and in Asia.

Audi AG saw its operating profit rise 16 per cent to 401 million euros ($545.6 million) from 345 million euros, led in part by demand for its new A5 series and the launch of the new TT Roadster.

The Czech-based unit Skoda saw its operating profit grow 20 per cent to 172 million euros ($234.01 million) from 143 million euros a year earlier as the Fabia model lured new buyers into showrooms.

The company's Spanish SEAT brand had an operating loss of 11 million euros ($14.97 million), but that was narrower than the 32 million euros loss it posted in 2006.

Wolfsburg-based Volkswagen said last month that it earned 740 million euros ($1 billion) in the January-March period, compared with 327 million euros a year earlier. Sales rose 5.1 per cent to 26.6 billion euros ($36.19 billion) from 25.3 billion euros.

Volkswagen reiterated that its global vehicle sales rose by 7.9 per cent in the first quarter to 1.47 million units.

Big gains in China and eastern Europe, and a modest gain in the United States, helped offset a dip in sales in Volkswagen's German home market after the country increased its value-added tax rate in January.

Despite the improvements, the North American market, particularly the U.S., remained a sore sport for the car maker.

Poetsch said the company still hopes to break even in the region by 2009, despite the fact that sales fell nine per cent to 3.32 billion euros ($4.51 billion) there in 2006.

The operating profit for the region was not given, but Poetsch said the company was not profitable without saying how much of a loss it incurred.

Geographically, revenues in VW's key European markets were up 7.5 per cent to 19.32 billion euros ($26.25 billion). In South America and South Africa, sales were up 5.5 per cent to 2.29 billion euros ($3.11 billion), while in Asia and the Pacific, sales rose 11 per cent to 1.71 billion euros ($2.32 billion).

In China, Volkswagen reported an operating profit of 34 million euros ($46.2 million) in the first quarter, more than twice the 15 million euros ($20.38 million) from a year earlier.

Looking ahead, Poetsch said the company expects to ``increase worldwide deliveries to customers slightly in 2007'' and to exceed 2006's sales tally of 104.9 billion euros ($142.72 billion).

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Volkswagen says its brands improving, led by VW, which turned profit in Q1
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