VW’s Audi Profit Falls 39% as Recession Curbs Sales (Update2)
March 09, 2010, 8:56 AM EST(Adds CFO comments in 11th paragraph.)
By Andreas Cremer
March 9 (Bloomberg) -- Volkswagen AG’s Audi luxury division said profit fell 39 percent last year as the recession caused the company’s first decline in worldwide deliveries in 14 years.
Net income dropped to 1.35 billion euros ($1.8 billion) from 2.21 billion euros a year earlier, Chief Executive Officer Rupert Stadler said today at a news conference. Revenue declined 13 percent to 29.8 billion euros.
Audi has a goal of dethroning Bayerische Motoren Werke AG as the world’s largest maker of luxury cars by 2015. Stadler reiterated a goal today of restoring deliveries this year to 1 million cars and sport-utility vehicles, a 5.3 percent increase from 2009. BMW is targeting a “single-digit percentage” sales gain while Daimler AG’s Mercedes-Benz division, the No. 2 luxury-car manufacturer, aims to outpace auto-market growth of 4 percent.
“The worst appears to be over but we cannot yet sound the all-clear for 2010,” Stadler said at Audi headquarters in Ingolstadt, Germany.
Volkswagen fell as much as 1.57 euros, or 2.2 percent, to 69.65 euros and was down 1.9 percent as of 2:49 p.m. in Frankfurt. The stock has declined 9.3 percent this year.
Audi’s operating profit dropped 42 percent to 1.6 billion euros. Chief Financial Officer Axel Strotbek said the division is targeting operating-profit growth in 2010 as it cuts production costs further following an 11 percent reduction in 2009.
Deliveries last year declined 5.4 percent to 949,729 cars and SUVs from 1 million in 2008. Sales by the Lamborghini brand fell 38 percent to 1,515 sports cars.
‘Brave’ Prediction
“In the current difficult environment, it’s rather brave of Audi to come out and say we’ll be able to return to the 1 million-car level,” Stadler said. “We’re confident of being able to do so, and other manufacturers have been far less concrete with their predictions.”
The VW unit aims to add eight models in the next five years, bringing the lineup to 42 vehicles, and invest 7.3 billion euros on car development and plant upgrades through 2012.
While Audi has been outperforming BMW and Mercedes-Benz in markets like China and Europe, it’s lagging behind in the U.S., the No. 1 market for luxury vehicles.
“On balance, business is of course burdened by the current situation in foreign exchange rates and the pricing structure in the U.S.,” Strotbek said.
Audi is considering scaling back German production of the A3 compact car in coming months as the end of 2,500-euro “cash- for-clunkers” payments in the country and stalling economic growth reduce demand for the vehicle, Peter Mosch, Audi’s works council chief, said on March 3.
“The crisis will keep us busy much longer than commonly thought,” Stadler said today. “What matters now is to remain vigilant, monitor developments very closely and react adequately to possible disturbances.”
--With assistance by Chris Reiter in Berlin. Editors: Tom Lavell, Kenneth Wong
To contact the reporter on this story: Andreas Cremer in Ingolstadt, Germany, via acremer@bloomberg.net.
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net.
