German automaker Volkswagen AG on Thursday raised its forecast for fiscal 2021 operating margin after reporting a significant growth in first-quarter profit with strong revenues and deliveries. The company also projects significantly higher revenues and deliveries in the full year. Meanwhile, Volkswagen shares were losing around 2 percent in German trading.

Looking ahead for fiscal 2021, Volkswagen now expects operating margin to be in the range of 5.5 to 7.0 percent, compared to previously expected 5.0 to 6.5 percent.

Assuming successful containment of the Covid-19 pandemic, the company expects deliveries to customers in 2021 will be significantly up on the previous year amid continued challenging market conditions.

Sales revenues are expected to be significantly higher than the prior-year figure. The shortage of semiconductors throughout the industry is expected to have a more significant impact in the second quarter than before.

CEO Herbert Diess said, “We started the year with great momentum and are on a strong operational course, as the good quarterly figures show. Our e-offensive continues to gain momentum and we are making good progress with the transformation. There is still much more we can achieve in the remainder of the year.”

The company noted that its positive business development in the second half of 2020 continued in the first quarter of this year. Some key figures even came in above pre-crisis levels from the first quarter of 2019.

For the first quarter of fiscal 2021, profit after tax grew significantly to 3.4 billion euros from last year’s 0.5 billion euros.

Operating profit surged to 4.8 billion euros from prior year’s 0.9 billion euros, despite Covid-19 and slight impact from semi-conductor shortages. Operating return on sales reached 7.7 percent, up from 1.6 percent a year ago.

Sales revenue climbed 13.3 percent to 62.4 billion euros from 55.1 billion euros last year, thanks to increased sales volumes and stronger demand for higher-margin models.

Production grew 16.1 percent from last year to 2.32 million units, and vehicle sales increased 20.5 percent to 2.33 million units. In the quarter, deliveries went up 21.2 percent on previous year to 2.4 million vehicles. Sales of electrified vehicles more than doubled to 133,300 units.

Volkswagen’s largest single market China recorded volume growth of 61.4 percent.

In Germany, Volkswagen shares were trading at 212.95 euros, down 2.3 percent.

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