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Germany’s Volkswagen AG (VLKAY) posted a handsome 41% rise in net profits to €21.7 billion ($28.7 billion) in 2012 from €15.4 billion in the prior year, driven mainly by the accounting boost received from the addition of Porsche into the company’s well renowned 12 brands.

Revenues escalated 21% to €192.7 billion ($254.9 billion), driven by impressive vehicle deliveries in the year that topped 9 million units globally for the first time in the company’s history. Vehicle deliveries grew 12.2% to 9.3 million units in 2012, driven by strong demand in North America and Asia, partially offset by weak sales in Europe.

Operating profits edged up 2.1% to €11.5 billion ($15.2 billion) in 2012. Due to the impressive rise in profits, the automaker raised its dividend on ordinary shares by 16.7% to €3.50 ($4.60) from €3.00 and on preferred shares to €3.56 ($4.71) from €3.06 for 2013.

Volkswagen expects 2013 revenues and vehicle deliveries to exceed the 2012 levels. However, due to the uncertain macroeconomic environment in Europe, the company anticipates 2013 operating profits to tally with the 2012 level.

Recently, Germany’s another automaker Daimler AG (DDAIF) reported an 8% increase in net earnings to €6.50 billion ($8.38 billion) or 7% to €5.71 ($7.37) per share in 2012. Revenues went up 7% to €114.30 billion ($147.4 billion), mainly driven by higher sales in Mercedes-Benz cars and Daimler Trucks segments as well as higher revenues generated from Daimler Financial Services.

However, EBIT slid 2% to €8.62 billion ($11.11 billion) during the year. The decline was attributable to a shift in the regional structure of unit sales, unfavorable model mix and higher expenses in connection with the expansion of Mercedes-Benz Cars’ product portfolio.

Volkswagen, a Zacks Rank #2 (Buy) stock, has targeted to become the world’s largest carmaker both in terms of sales and profitability by 2018 based on the strength in emerging markets, including Brazil, Russia, India and China.

While we intend to prefer Volkswagen, other stocks that are also worth a look include Oshkosh Corporation (OSK - Snapshot Report) and STRATTEC SECURITY CORPORATION (STRT - Snapshot Report). Both of them carry a Zacks Rank #1 (Strong Buy).


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