Volkswagen Group’s first-quarter operating profit rose 22 percent from a year earlier, as earnings from Porsche and Audi helped to offset falling profitability at the automaker’s core VW brand.

Earnings before interest and taxes increased to €2.86 billion ($3.97 billion) from €2.34 billion a year earlier, VW said in a statement. First-quarter revenue was up nearly 3 percent to €47.8 billion.

“The Volkswagen Goup has established a strong position in recent years,” and “our good start to the current fiscal year is an additional proof of this,” CEO Martin Winterkorn said in the statement. “We must now continue improving our position and maintain our successful course.”

All VW Group car brands except Seat posted profits in the quarter.

VW brand’s operating profit was €440 million, down from €590 million the year before. Profit was hit by lower sales volumes, negative exchange rate trends, especially in South America and Russia, and higher upfront investments in new technologies, VW said.

Audi’s operating profit at €1.3 billion was the same as in the first quarter of 2013. The result was impacted by high upfront investments in new products and technologies, as well as in the expansion of Audi’s production network outside Germany.

Porsche’s profit rose to €698 million from €573 million. Bentley’s operating profit increased to €45 million from €27 million.

New models and higher vehicle sales helped Skoda to boost profit by 65 percent to €185 million. Seat narrowed its loss to 36 million euros from 46 million euros.

VW’s first-quarter group vehicle sales increased 6 percent to a record 2.4 million units, helped by rebounding demand in Europe. Quarterly deliveries of Audis and Porsches, which account for about two-thirds of VW group EBIT, rose 12 percent and 4.5 percent respectively to 413,000 and 38,700 cars. Sales at the core VW brand rose 4 percent to 1.48 million vehicles. Skoda sales were up 12 percent to 247,200 and Seat’s deliveries increased 7 percent to 93,400.

VW stuck to the cautious outlook it published in February, even though core European markets that account for 40 percent of group sales have increased volumes for seven straight months. Group operating margin may be broadly flat this year, coming in at about 5.5 percent to 6.5 percent, compared with 5.9 percent last year, VW said, reiterating its Feb. 21 statement. That compares with 2013 car division margins of 8.8 percent at Toyota and 9 percent at Hyundai.

Analysts said VW was understating its prospects and they expect the carmaker to revise its full-year earnings guidance upwards. “There’s an 80-percent chance that VW will raise its guidance in the next 3-4 months,” Frankfurt-based Metzler Bank analyst Juergen Pieper said, citing the European recovery and growing savings from modular production.

VW said last month that it may sell more than 10 million vehicles for the first time in 2014, up from 9.7 million last year. It previously planned to top 10 million sales in a year by 2018.

VW plans to introduce 100 new or revamped cars through next year as part of a strategy to overtake Toyota as the global leader in auto sales by 2018.