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Volkswagen First-Quarter Profit Soars on Sales Gain

Volkswagen, Europe's biggest car maker, said Wednesday that its first-quarter net profit more than doubled as sales showed solid gains worldwide.

The Wolfsburg-based company said it earned 740 million euros ($1 billion) in the January-March period, compared with 327 million euros a year earlier. Sales rose 5.1% to 26.6 billion euros ($36.1 billion) from 25.3 billion euros.

Operating earnings, which analysts use as yardstick to gauge a company's health, rose 81% to 1.08 billion euros ($1.5 billion) from 599 million euros.

The company has spent nearly two years cutting some 20,000 jobs from its German work force as it strives to become more nimble in the face of rising competition from European and Asian rivals.

Volkswagen said earlier this week that its global vehicle sales rose by 7.9% in the first quarter to 1.47 million units.

Big gains in China and eastern Europe, and a modest gain in the United States, helped offset a dip in sales in Volkswagen's German home market after the country increased its value-added tax rate in January.

Looking ahead, the company said it expects its 2007 operating profit to "probably be higher than the previous year's operating profit" of 2 billion euros.

Volkswagen shares rose 1.5% to 116.30 euros ($157.90) in Frankfurt trading after the announcement.

Last month, German luxury automaker Porsche raised its stake in Volkswagen to 31% in a move that Porsche said was aimed at protecting VW from a hostile takeover.

Porsche has built up its holding to become VW's biggest shareholder. It is followed by the German state of Lower Saxony, which holds nearly 20% of the company.

The preliminary earnings report was released a day ahead of Volkswagen's annual shareholder meeting. The complete report is scheduled to be released May 2.