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Audi profit falls after difficult Q1

INGOLSTADT, May 3, 2020

German luxury automaker Audi, affiliated to Volkswagen, reported that its first-quarter profit after tax fell to €431 million ($478 million) from €929 million last year.
 
Profit before tax declined to €545 million from last year's €1.20 billion.
 
Operating profit was €15 million, down from €1.10 billion a year ago, which corresponds to an operating return on sales of 0.1 per cent, down from 8 per cent last year.
 
Audi Group generated revenue of €12.45 billion, down from €13.81 billion a year ago. The year-on-year decline was mainly due to the negative development of key markets due to the coronavirus pandemic. In the Automotive segment, revenue was €12.31 billion, down €13.63 billion last year.
 
Audi Group produced a total of 369,975 cars, down from last year's 442,831 cars, and produced 13,395 motorcycles, down from 16,183 motorcycles last year.
 
Audi Group delivered 354,946 cars worldwide, down from 449,252 cars last year. Due to lockdowns and closed dealerships worldwide, deliveries of Audi-brand cars fell 21.1 per cent to 352,993 cars.
 
Looking ahead, the company expects the corona pandemic would have a significant impact on the global economy and car markets over the full year, and currently assumes that deliveries of the Audi core brand, revenue and operating profit will be well below the prior-year levels.
 
Due to lockdowns and closed dealerships worldwide, deliveries of Audi-brand cars fell by 21.1 per cent in the first three months of this year. 
 
In view of the financial impact of the corona pandemic, Audi had taken early countermeasures to safeguard its liquidity. 
 
Furthermore, the cash flow was boosted by the sale within the VW Group of AEV GmbH. In order to protect its employees and in response to demand and supply-chain-factors, production was temporarily suspended worldwide and short-time working was introduced at the plants in Germany. 
 
Production in China is already largely back to normal. The Audi plants in Europe have been gradually ramping up production according to a fixed plan since the end of April. 
 
The Audi Group expects the corona pandemic to have a significant impact on the global economy and car markets over the full year, and currently assumes that deliveries of the Audi core brand, revenue and operating profit will be well below the prior-year levels.
 
In the context of the corona pandemic, Audi was operating in a highly volatile regulatory and economic environment in the first quarter. The global shutdown had adverse effects along the entire automotive value chain, for example on sales, customer demand and supply-chains stability. 
 
“We closed down our production capacities in a controlled manner and in doing so have protected jobs at our sites in Germany thanks to short-time working. The health of our employees and their families has always been and still is our top priority,” said Arno Antlitz, Member of the Audi Board of Management for Finance, China and Legal Affairs.
 
“At the same time, during this phase when the markets are at a standstill, we have succeeded in protecting our liquidity and keeping core processes stable at our company also in the crisis.”
 
After the car manufacturer had initially started the year 2020 with a tailwind from its model initiative, the spread of the coronavirus and related regulatory measures such as the closure of dealerships and lockdowns from February onwards had an increasingly adverse impact on car deliveries, first in the Chinese market and later in the other core regions as well. 
 
Thanks to further efficiency gains and the greater use of synergies within the Volkswagen Group, Audi was able to reduce its research and development expenditure. The operating return on sales was 0.1 per cent (2019: 8.0 per cent).
 
“Audi is in a robust financial position. We are systematically reducing our short-term expenditure without compromising Audi’s ability to act and its long-term future capability,” said Arno Antlitz. 
 
The company has been pushing forward with important core processes also during the phase of short-time working, for example in the Technical Development and Production divisions, in order to safeguard future market launches and ensure a rapid ramp-up.
 
After production at the Chinese plants had already been restarted on February 17, 2020 and is now largely back to regular volumes, the European sites have been gradually ramping up again since the end of April 2020. Comprehensive precautions have been taken to protect employees’ health during the restart.
 
With a view to full-year 2020, against the backdrop of the ongoing corona pandemic, the car manufacturer anticipates negative growth for the global economy and significantly lower demand in worldwide car markets. 
 
The Audi Group therefore expects deliveries of the Audi core brand, revenue and operating profit to be significantly below the respective prior-year figures. The net cash flow is expected to be lower than in the previous year. -- Tradearabia News Service
 



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