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By Nick Tattersall
HAMBURG, April 24 (Reuters) - Volkswagen AG said on Thursday its first quarter profit will significantly lower than a year ago due to unfavourable exhange rates, new model costs and equity writedowns, but it forecast a stronger second half.
"The negative effects on the result for the first quarter of 2003 are particularly high compared with the previous year," Bernd Pischetsrieder, chief executive of Europe's biggest carmaker, said in a speech at VW's annual shareholders' meeting.
"Model ramp-ups incurring high start-up costs and up-front expenditure as well as negative exchange rate effects have had an impact on the operating profit."
Pischetsrieder said he expected a "substantial improvement in operating profit during the course of the year, particularly in the third and fourth quarters," but repeated that over the year as a whole the result would fall below last year's 4.76 billion euros ($5.2 billion).
VW stock, which has underperformed the DJ European autos index by around seven percent since it warned last month profits would be down this year, was down 2.5 percent at 34.10 euros by 0832 GMT.
Like other mass-market car makers, VW is battling weak demand on both sides of the Atlantic, but its profits are under particular pressure as key models age simultaneously and development costs for replacements pile up.
The company boasts that on average it will launch an updated model variant somewhere in the world every three weeks this year, although it is aiming to cut investment spending by at least 10 percent.
Pischetsrieder said no decision had yet been made about reorganising board responsibilities after the sudden departure of sales and marketing director Robert Buechelhofer, who quit earlier this month over a dispute about marketing.
The company said it still expected to lift unit sales back over five million from 4.98 million in 2002, helped by the launch of an updated version of its top-selling Golf later in the year and its recently-introduced Touran minivan.
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