VW cuts dividend as profit drops
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FRANKFURT, Germany (Reuters) -- Germany's Volkswagen posted a smaller than expected decline in 2003 profit on Wednesday but cut its dividend payment by 19 percent as weak demand for its cars and a strong euro took their toll.
Operating profit before special items at Europe's biggest car maker fell to 2.491 billion euros ($3.18 billion) last year from almost 4.8 billion in 2002 but beat the consensus estimate of a Reuters poll that showed analysts expected 2.189 billion.
But VW said its operating profit took a hit of 711 million euros after the impact of one-off special items which analysts put down to VW writing down costly investments in its more upmarket brands.
"We have seen a huge depreciation on the Phaeton and the Bentley as well as VW's South American business,'' said one Frankfurt-based analyst.
Despite launching a new generation of its top-selling Golf cars at the end of August, VW said sales rose just 0.2 percent in 2003 to 87.153 billion euros.
VW, which said at the end of last year that while 2004 should be a better year, it would be 2005 before business was back at full throttle, did not update its outlook on Wednesday.
Volkswagen, along with its European peers, is suffering from sluggish car demand, particularly at home, and from the impact of a strong euro which is denting the value of overseas sales.
French rival PSA Peugeot Citroen, which has been hurt by a dearth of new models and the cost of developing new ones, last week posted its first annual earnings drop in six years.
Unlike Peugeot, however, VW already has a new car on the road in the shape of the Golf V, but fears it is not selling as well as hoped have made shares in the German carmaker the weakest performer on the blue-chip DAX index this year.
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