Volkswagen's first-quarter operating profit fell 37% year-on-year

German auto giant Volkswagen reported a sharp drop in first-quarter profits on Wednesday as the company grapples with the disruptive impact of U.S. tariffs on the global auto industry.

Europe's largest automaker reported operating profit of 2.9 billion euros ($3.3 billion) in the first three months of the year, down 37% from the same period last year.

The company's first-quarter sales revenue was 77.6 billion euros, up 2.8% from the same period last year. The company said that higher car sales in markets outside China supported the growth.

The company said that first-quarter car sales were 2.1 million, up 0.9% from the same period last year. Car orders in Western Europe rose 29% in the first quarter compared with the same period last year.

Looking ahead, Volkswagen said it expects operating sales return, net cash flow and net liquidity to be at the low end of its annual forecast due to political uncertainty, trade restrictions and increased emissions regulations.

Volkswagen's shares have risen nearly 10% so far this year.