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After poignant inauspicious factors in 2018 financial year: Audi accelerates the realignment

“We can't be confident with a performance. Audi has glorious products on a market, though in business terms, we unsuccessful a WLTP changeover as a ultimate highlight test,” says Bram Schot, Chairman of a Board of Management of AUDI AG. “The Audi employees showed a right suggestion in this formidable conditions and performed a best-possible outcome for Audi in 2018. With this spirit, we are now rebellious a restart together during Audi.”

Deliveries of 1,812,485 cars of a Audi code in 2018 were 3.5 percent subsequent a prior-year series (2017: 1,878,105). Especially in Europe, limited product accessibility due to a transition to a initial theatre of a WLTP exam cycle led to poignant decreases. The Audi Group’s revenue of €59,248 million roughly reached a prior-year turn (2017: €59,789 million). Positive product-mix effects resulted from a start of a Audi Q8 and poignant volume and income expansion during Lamborghini with a Urus SUV model.

The operating lapse on sales before special items of 7.9 percent (2017: 8.5 percent) did not strech a prior long-term aim mezzanine of 8 to 10 percent. For 2018, Audi famous special items from a diesel predicament in an volume of €1,176 million (2017: €387 million). In serve to a legally contracting executive sequence by a Munich II open prosecutor commanding a excellent of €800 million, they also embody spending for technical measures, patron measures as good as losses and provisioning for authorised risks. After these special items, a handling distinction for 2018 was €3,529 million (2017: €4,671 million) and a handling lapse on sales was 6.0 percent (2017: 7.8 percent).

With a Audi Transformation Plan, a association implemented measures in an volume of €1.9 billion in 2018. Of that amount, €1.1 billion had a certain impact on handling distinction as distant as comparison with 2017 is concerned. Primarily as a outcome of cost fortify with courtesy to overheads, a association was so means to partially equivalent WLTP distortions and losses from a diesel crisis. The module for gain alleviation includes measures for shortening costs as good as for augmenting revenue. “The Transformation Plan is creation a poignant grant towards defence a future. Because usually in this approach is it probable for us to send huge resources into destiny areas and beget a money upsurge to financial electric mobility,” says Alexander Seitz, Board Member for Finance, China, Compliance and Integrity. “In perspective of a compulsory progress, we are augmenting a aim over a designed duration to around 15 billion euros.” Audi has already motionless on petrify stairs for gain effects of some-more than €10 billion in a duration of 2018 by 2022. In a new work package of a program, Audi will optimize a collateral employed with a perspective to a long-term boost in a company’s value.

The financial result augmenting significantly to €831 million in 2018 (2017: €46 million). In serve to a certain growth of business in China, there was an impact from a first-time adoption of a new IFRS accounting standard. Financial effects from hedging exchange for business operations are now entirely reported underneath handling distinction instead of financial result, as was formerly a case. Profit before tax of €4,361 million was 7.5 percent revoke than in a prior year (2017: €4,717 million).

In capitulation of their joining in a really formidable year 2018, Audi’s employees will attend in a company’s earnings. The Audi distinction pity reward for a learned workman during a plants in Germany for a year 2018 is €3,630 (2017: €4,770). This volume is formed on a regulation laid down in a common agreement. The association has practiced a remuneration for financial year 2018 to equivalent a effects of a earnings-reducing fine, and has so augmenting a amount. Regulations on distinction pity exist also during a Audi subsidiaries.

Against a backdrop of a severe conditions in 2018, a Audi Group endorsed a strong financial condition. Through cost reductions and investment discipline, a association generated a significantly certain net money flow of €2,141 million (2017: €4,312 million) – notwithstanding a outflows connected with a diesel predicament and high allege output for a future. In 2017, a one-time outcome from a sale of a minority interest in Volkswagen International Belgium S.A. had a poignant certain impact on a net money flow. At Dec 31, 2018, net liquidity amounted to a sum of €20,442 million (2017: €20,788 million), that demonstrates a ongoing high self-financing strength of a Audi Group.

The Board of Management will benefaction a vital realignment of a association during a Annual General Meeting on May 23, 2019. “We are significantly accelerating a change, since we have to master a double transformation,” states Bram Schot. He says a idea is to make Audi into an efficient, flexible and stress-resistant classification again. In a industry’s mutation with courtesy to technologies and business models, a association wants to set benchmarks. “We will be most some-more customer-oriented and reduction self-centered; we will concentration on what is wilful and exercise what is motionless on in a really unchanging and trained manner.”

As partial of a realignment, a association is also reviewing a value-creation indication and aims to grasp a poignant boost in productivity. In a future, a Audi Group will revoke straight formation and concentration on a core business activities. In dialog with a worker representatives, a association is defining a destiny allocation of Audi models to a plants and so a placement of tasks and a plants’ ability growth in a general growth and prolongation network. The bundling of platforms and car architectures in prolongation as good as a serve flexibilization are dictated to optimize output and ability utilization.

With a aim of augmenting a company’s long-term value, a innovative strength and a lure as an employer, lapse on investment (ROI) will turn another pivotal indicator of success for Audi. For inner steering, a impact of car projects on normal CO2 emissions will be financially evaluated and enclosed in this indicator. In a unbroken restructuring of a Audi indication portfolio, a Four Rings will implement synergy intensity within a Volkswagen Group to a most larger border in a future, for instance with a scaling of electric mobility around a PPE reward design grown together with Porsche, and Volkswagen’s modular electric-drive pack (MEB). Schot: “Customers will change over to electric cars faster and some-more widely than we primarily expected. This is also demonstrated by a intensely certain response to a Audi e-tron and to a Q4 e-tron concept, that we presented final week during a Geneva Motor Show. The economies of scale of a Group are essential advantages for us. We have already stretched a electric roadmap and will now offer about 30 electric models by 2025.”

Audi will restructure a product portfolio in line with a growth of direct and will serve rise it, quite in a tip reward segments. By 2025, a product operation in a tip mid-range and full-size shred will have grown to 15 models.

Based on a Audi Transformation Plan, a tolerable potency boost is to be determined via a company. “Across all divisions, we are fixation a transparent concentration on a potency and a compulsory cost march – with full clarity and effective early warning systems,” says Alexander Seitz. “This also includes being open to a fact that in some areas, we can grasp a goals faster, some-more effectively and some-more good by partnerships.” Audi will boost a speed and lively also by shortening organizational complexity and by streamlining processes and government structures.

With a new stating structure that took outcome in Jan 2019, a Audi Group is already focusing a classification and shortening complexity as a initial step. Due to a inclusion of some multi-brand import companies, Audi’s combined financial statements formerly enclosed volumes and pivotal financials from a sale of automobiles of other Group brands. They are now reported during a turn of a Volkswagen Group. This has an impact on pivotal sum of a Audi Group: For 2018, a new stating structure would outcome in practiced income of €53.6 billion instead of a reported €59.2 billion. Operating distinction would be radically unchanged, while handling lapse on sales after special equipment would be 0.6 percentage points aloft than reported during 6.6 percent. Accordingly, a association is lifting a long-term vital aim mezzanine for handling lapse on sales to 9 to eleven percent.

2019 will be a transition year with special challenges for a Audi Group as it drives brazen a vital realignment: “In 2019, we will set an critical vital march and work tough on a cost structures. Operationally, however, we also have a year of tidying up,” says Alexander Seitz. “We are remediating a aftereffects from a well-developed year 2018 and bringing a tube from prolongation to retailing behind into balance. This charge will primarily have an inauspicious impact on a earnings.”

Audi deliveries are approaching to boost tolerably in 2019. The Audi Group forecasts income of somewhat above a practiced figure for a prior year. In a new stating structure, a association expects a handling lapse on sales to be between 7.0 and 8.5 percent. The net money upsurge is approaching to be between €2.5 and 3.0 billion.

In a initial months of this year, Audi is constantly shutting a remaining gaps in a product charity from a changeover to WLTP and is formulating a conditions for a certain sales development. In a march of a year, inventories that had been ramped adult in 2018 for supply government during a transition to WLTP will be reduced. For example, Audi had already gradually restarted a prolongation of engine-transmission variants for that a association approaching form capitulation in a nearby future, in sequence to safeguard fast accessibility for business following central approvals. Once a compulsory homologations have been received, these pre-specified vehicles will gradually upsurge out of inventories. In addition, a association is creation complete preparations for a next, equally demanding, theatre of a WLTP exam cycle, that will come into force on Sep 1, 2019 with even stricter authorised mandate for all vehicles. Audi has augmenting a technical test-bench capacities by around a third in sequence to make doing some-more manageable, and has combined approximately 300 employees in Technical Development for homologation and powertrain development. The association has reduced a portfolio of engine-transmission variants by about 30 percent in line with marketplace preferences, so noticeably shortening complexity as a initial step.

This year will again underline a tight report of unbroken marketplace launches. In total, Audi will once again benefaction some-more than 20 new or updated models in 2019. The code is heightening a sporty picture with 9 new S models as good as 4 generally absolute R and RS models. The countless new products are compared with together high ramp-up costs. Within a horizon of a electrification initiative, a new Audi e-tron will be followed by a universe premiere of a e-tron Sportback. Exclusively for Chinese customers, a Q2 L e-tron will be launched in 2019 as an electric model. In addition, 6 plug-in hybrid models will element a operation of new products this year. By a finish of 2020, Audi will already have launched a sum of twelve electrified vehicles, covering each segment. In 2019, a association will make estimable allege output for a ramp-up of electric mobility and other topics of a future. Audi forecasts a ratio of investigate and growth output to income somewhat above a aim corridor, that has risen to 6.5 to 7.0 percent due to revenue-reducing effects from a deconsolidation of a multi-brand sales companies. In 2019, a ratio of collateral output to income is approaching to be within a aim mezzanine of 5.5 to 6.0 percent, that has also been practiced upwards.

Audi will face hurdles in 2019 also from disastrous macroeconomic developments and a banking and raw-material environment. The association will consistently take countermeasures with a systematic roll-out of a Audi Transformation Plan and other critical measures. Seitz: “On a whole, a exam for a attention has maybe never been as extensive as it is today. Our competitors are also responding with inclusive measures. On tip of that, we during Audi have a possess constructional tasks to resolve. We contingency therefore act decisively now and reposition ourselves in many areas to safeguard a long-term competitiveness.”


Selected pivotal sum of a Audi Group

2018

2017

Cars delivered Audi brand

1,812,485

1,878,105

Revenue Audi Group
in EUR million

59,248

59,789

Operating distinction before special equipment Audi Group
in EUR million

4,705

5,058

Operating lapse on sales before special equipment Audi Group
in percent

7.9

8.5

Operating distinction Audi Group
in EUR million

3,529

4,671

Operating lapse on sales Audi Group
in percent

6.0

7.8

Net money upsurge Audi Group
in EUR million

2,141

4,312

Net liquidity Audi Group
in EUR million

20,442

20,788

Return on investment (ROI) Audi Group
in percent

10.0

14.4

Download Audi Annual Report: www.audi.com/annual-report