The second quarter was anything but brilliant for Audi, but compared to the very weak start to the year, the VW subsidiary has improved significantly. Nevertheless, it is lowering its return expectations.
Audi is slowly fighting its way through its current weak phase. In the first half of the year, the group made around 1.1 billion euros less profit, and sales fell by 3.2 billion, the VW subsidiary announced. As bitter as these figures are at first glance, they show a clear upward trend, because Audi had already reported declines after the first quarter, which were only slightly lower overall. Sales in the second quarter were therefore almost at the same level as the previous year, and profits were only slightly lower. Chief Financial Officer Jürgen Rittersberger also emphasized: “The second quarter was significantly better than the first quarter. We were able to catch up.”
One of the factors contributing to this was that delivery problems with parts for the large V6 and V8 engines, which are usually installed in more expensive and more profitable cars, subsided in the second quarter. Rittersberger said that they are now “very well supplied” again. He expects normal production to return to normal in the third quarter, which will help the group not only in terms of vehicle volume but also in terms of earnings. Specifically, sales in the first half of the year were 30.9 billion euros and profits were just under 2.2 billion.
Forecast lowered
Nevertheless, Audi lowered its return expectations for the year as a whole. The forecast for the operating return on sales is now 6 to 8 percent – instead of 8 to 10. According to Rittersberger, the reason for this is the costs of restructuring in Brussels. The entire plant there is at risk – among other things because the electric models produced there may be discontinued prematurely. However, Audi has not yet provided any further details about Brussels.
Overall, Audi is still in a “transitional year,” said Rittersberger – as was the case after the first quarter. However, he expects significant improvements through numerous new models that are gradually being introduced. These should then give the recently sluggish growth in electric cars a “significant boost” from the fourth quarter and especially next year. Audi, however, does not want to get involved in the current price competition for electric cars in China. This is “ruinous,” said the CFO.
Source: Stern
