VW Takes Fresh €2.2bn Hit Over Diesel Scandal

Volkswagen (LSE: 0P6N.L - news) has taken a fresh €2.2bn (£1.8bn) profit hit thanks to "further legal risks" in North America where it is facing big payouts over the diesel emissions scandal.

It (Other OTC: ITGL - news) comes a day after three US states filed three civil lawsuits against the company in cases that could lead to fines of hundreds of millions of dollars or more.

The German car maker reported operating profit for the first half of 2016 down 22% to €5.3bn (£4.4bn), weighed down by the additional sum being set aside.

However, profit excluding the one-off provision was up 7% to €7.5bn (£6.3bn) which VW said was "significantly higher" than expected "despite the ongoing economic impact from the diesel issue". Shares (Berlin: DI6.BE - news) rose 6% on the day.

Volkswagen admitted in September that it installed illegal software that deactivated pollution controls on more than 11 million diesel vehicles worldwide.

It has already set aside €16.2bn (£13.5bn) to pay for technical fixes for cars that violate clean air standards, as well as buy-backs of vehicles and legal costs, helping it slump to a net loss of €5.5bn (£4.6bn) for 2015.

In the US, Volkswagen has agreed a $14.7bn (£11.2bn) settlement with consumers, while this week the states of New York, Massachusetts and Maryland launched lawsuits accusing it of violating their environmental laws.

But the company said latest underlying results had been bolstered by an improvement in European car markets and the return of orders from large corporate fleets.

However it still expects 2016 sales revenue to decline by as much as 5% compared to 2015.