Volkswagen first quarter profit jumps 17 percent on Europe recovery, cost cuts

Operating profit jumped 17 percent to 3.33 billion euros ($3.65 billion), from 2.86 billion a year earlier, VW said on Wednesday, close to the top end of a range of analyst estimates in a Reuters poll and above the forecast average of 3.12 billion euros.

The operating margin at VW's troubled core autos division edged up to 2 percent from 1.8 percent a year ago, in a sign that Chief Executive Martin Winterkorn's cost-cut drive is bearing fruit.

Underperformance of the namesake brand in markets like the United States and Latin America was one factor leading Piech to provoke a two-week showdown with VW's CEO that ended up forcing the chairman to resign.

"We have always emphasized that 2015 will be a challenging year for the automotive industry as a whole, and also for us," Winterkorn said. "Our key figures show that the VW group remains on course, despite the headwinds."

Quarterly sales of VW-badged cars in high-margin western European markets rose 6.5 percent to 381,600 vehicles, offsetting declines in the United States and even China, a major source of VW profit where the namesake brand achieved double-digit gains in recent years.

The German group stuck to its guidance for the 2015 operating margin to come in a range between 5.5 and 6.5 percent after reaching 6.3 percent last year.

VW also still expects group revenue to exceed last year's record 202 billion euros by as much as 4 percent on continued growth in deliveries.

(Reporting by Andreas Cremer; Editing by Georgina Prodhan and Maria Sheahan)