Audi Canada

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.”

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