VW EXPECTS $600 MILLION PROFIT

VW EXPECTS $600 MILLION PROFIT

Volkswagen AG, Europe's largest carmaker, releases 1989 group figures this week that probably will show profit of more than 1 billion deutsche marks ($600 million), according to industry analysts.

They said the West German firm, which had profits of DM779.9 million ($464 million) in 1988, is setting its sights on further growth by quickly sizing up the vast potential market for low-priced cars in reform-minded Eastern Europe."We estimate that the disastrous business environment in Brazil, the result of President Fernando Collor de Mello's austerity program, has a potential negative impact on Volkswagen 1990 earnings of around nine marks ($5.35) a share," Stephen Reitman, an auto analyst with the London brokerage UBS Phillips and Drew, said in a recent study.

Mr. Reitman has already reduced his forecast for VW's earnings per share for 1990 to 60 marks ($36) from an expected 58 marks ($35) for 1989.

VW shares traded around 602 marks ($358.30) toward the close of business in Frankfurt on Friday.

But at least one dark cloud hangs on the horizon. Because of a collapse in car demand in Brazil, VW's Autolatina unit there may show a loss in the 1989 figures scheduled to be released on Wednesday.

Also, the U.S. car market slump has led some analysts to speculate that VW's American subsidiary also could post a loss in 1989 and 1990. VW's U.S. car sales fell by almost 20 percent last year.

VW sells about 8 percent of its vehicles in the United States compared with 6 percent in Brazil.

But business in 1989 was the best on record for VW.

Group turnover, which includes sales from its Audi AG and Spanish Seat subsidiaries, rose to a provisional DM65 billion ($39 billion) from DM59.22 billion ($35 billion). Worldwide, it sold nearly 3 million vehicles.

European sales also rose, helping keep VW as the No. 1 carmaker on the continent for the fifth year running, again just ahead of Fiat SpA of Italy.

The strong demand for its cars, especially from foreign markets and for the Golf model - Europe's best selling car for the seventh year running - forced VW to introduce its first night shifts ever and employ more staff.