Speech to the 124th Annual General Meeting of AUDI AG

Ladies and Gentlemen,

In the past financial year, we continued to follow our strategic course of sustainable and profitable growth. As Mr. Stadler already mentioned, we once again posted record levels of unit sales, revenue and operating profit, despite challenging economic conditions. We therefore not only achieved our targets for financial year 2012, in fact we significantly surpassed them.

Let me now explain to you the development of the Audi Group’s key financial metrics. Before we look at the main items of the income statement, I would like to point out a change in our financial reporting: With the acquisition of Ducati, we report on the year 2012 for the first time with the segments of “Automobiles” and “Motorcycles.”

In 2012, we increased our revenue by 10.6 percent, or 4.7 billion euros, to the new record figure of 48.8 billion euros. This substantial increase is mainly the result of the positive development of unit sales. Among other effects, we profited from strong demand for Audi automobiles in the large-sedan and luxury segments due to full availability of the new A6 models worldwide and the A7 Sportback. An additional factor was the great popularity of our luxury model series, the A8, especially in the United States and China.

In the premium compact segment, we gained additional impetus above all from our new models, the Audi Q3 for example. And with the new Audi A3, we will further improve our strong competitive position in this segment in the future.

After the acquisition of the Ducati Group in July 2012, that company generated revenue of more than 200 million euros in the seasonally weaker half of the year; in full-year 2012, the Ducati brand posted revenue of approximately 600 million euros.

Due to the expansion of our business volume, the Audi Group’s cost of sales increased by 8.5 percent to approximately 39 billion euros. The fact that cost of sales once again increased at a lower rate than revenue demonstrates the success of our efforts to achieve continuous productivity advances and process improvements. After deducting production costs from revenue, the Audi Group therefore increased its gross profit in 2012 by 20.1 percent to approximately 9.7 billion euros. The gross margin increased accordingly to about 20 percent.

The Audi Group’s distribution costs amounted to 4.6 billion euros last year, which is significantly higher than the level of 2011. In addition to a larger sales volume, the increase is also due to higher marketing costs because of the launch of numerous new models and intensive competition in some key markets. Furthermore, we implemented strategic market development programs such as the new Audi City sales format. In the summer of 2012, we opened our first cyber store near Piccadilly Circus in London. And since the beginning of this year, we have had a digital showroom also in the center of Beijing. Various other measures were taken also in service and retailing to enhance our products’ worldwide customer appeal.

Primarily due to changes in the consolidated group, administrative expenses increased by 22.6 percent to 527 million euros in 2012. Other operating income, net, of 775 million euros was lower than in the prior year. The decrease compared with 2011 is mainly the result of lower income from currency hedging transactions. In total therefore, we were able to slightly increase our operating profit compared with the prior year, reaching a new record in our company’s history of 5.4 billion euros.

Let me now give you some details of the key drivers of this growth in earnings. I would like to begin with the opposing factors, those that had a negative impact on earnings. We also were unable to escape the high intensity of competition and the resulting pressure on prices last year, especially in China and Western Europe. Nonetheless, we continued to follow a qualitative growth path; that is, a growth path based on sustainability.

Because one thing is clear to us: Our premium customers quite rightly expect us to maintain price stability. For this reason, we have not participated in buying market share in the past, and we will not do so in the future either. Instead, we apply the funds available to ensure above all that we secure our strategic market positioning.

Let’s turn to investment. In addition to expanding our model and technology portfolio, the focus of our ambitious growth plans is on further developing our worldwide manufacturing structures. Take for example the expansion of our plant in Győr, Hungary, where the new A3 Sedan will roll off the assembly lines this year. Or our future plant in San José Chiapa in central Mexico. We are currently making substantial advance expenditure at those sites, which will generate revenue only after the upcoming start of production.

In addition, we will continue to strengthen our German locations in Ingolstadt and Neckarsulm in order to further enhance the company’s innovative power and competitiveness. The resulting increase in fixed costs reduced earnings by approximately 0.9 billion euros. However, our strong growth in unit sales is reflected by a positive effect on earnings of 1.1 billion euros. And on the product cost side, we achieved positive earnings effects of 0.6 billion euros through the further optimization of our material costs as well as through productivity advances. Exchange-rate effects also had a positive impact on the development of operating profit.

The Audi Group’s financial income amounted to 576 million euros in 2012. One of the main negative items was the interest-related decrease in income from the measurement of currency hedging transactions. In addition, expenses for the compounding of non-current provisions increased due to falling real interest rates.

The Audi Group thus posted profit before tax of approximately 6 billion euros in the year 2012.

The ongoing strong profitability of the Audi Group is also reflected in the development of our key figures for return: In 2012, we achieved an operating return on sales of 11.0 percent. In other words, we once again significantly surpassed our strategic return corridor of eight to ten percent, despite the challenging economic environment. This made the Audi Group one of the most profitable manufacturers in the worldwide automotive industry also in the year 2012.

Ladies and gentlemen, let me now explain the main balance sheet items. The Audi Group’s total assets increased by about 9 percent to more than 40 billion euros in 2012. The significant increase in non-current assets to approximately 18 billion euros is due on the one hand to higher property, plant and equipment related to the expansion of our worldwide business activities and the acquisition of the Ducati Group. On the other hand, equity-method investments increased following the acquisition of a 30-percent interest in Volkswagen Group Services. Current assets decreased, primarily due to the previously mentioned acquisitions, to 22.4 billion euros.

On the other side of the balance sheet, equity increased by approximately 2.1 billion euros to 15 billion euros at the end of the year. The main reason for the increase was a cash injection by Volkswagen AG of 1.6 billion euros into the capital reserve of AUDI AG. The appropriation of the remaining net profit after the profit transfer increased equity by a further 0.6 billion euros. As a result, the equity ratio of the Audi Group reached almost 37 percent at December 31, 2012. The increase in liabilities of 1.3 billion euros to 25.4 billion euros primarily reflects the increased provision for pensions caused by the lower imputed interest rate.

So the key balance sheet figures also document our company’s financial stability and sound capital structure.

Ladies and gentlemen, I will now give you some details of the cash flow statement. In 2012, we generated a cash flow from operating activities of 6.1 billion euros, which is almost at the level of the prior year.

At the same time, we made substantial investments in our future. So without considering changes in investments in companies, the cash outflow for investing activities for business operations increased from 2.8 billion euros to 3.2 billion euros. The main focus was on the aforementioned investments in new products, innovative drive technologies and the expansion of our worldwide production plants.

We financed all of the investments completely out of our own resources once again in 2012, without resorting to any form of borrowing. At the same time, without considering cash outflows for investments in companies, we generated a net cash inflow of 2.9 billion euros.

Net liquidity decreased to 13.4 billion euros at the end of 2012, primarily due to the acquisition of the Ducati Group and of a 30-percent interest in Volkswagen Group Services.

Ladies and gentlemen, the year 2012 featured difficult economic conditions in many markets. In this environment, the financial performance of the Audi Group once again demonstrates the success of our corporate strategy with its focus on sustainability and qualitative growth. We must consistently continue along this path!

For the year 2013, we expect repeated growth in unit sales by the Audi brand. In this context, from today’s perspective, the revenue of the Audi Group and of the Automobiles segment will increase slightly. Increases in unit sales of motorcycles and revenue are planned for the Ducati brand as well.

The Automobiles segment should achieve an operating return on sales at the top end of the strategic target corridor of eight to ten percent. An operating return on sales of eight to ten percent is planned also for the Motorcycles segment.

In the first quarter of this year – as Mr. Stadler already mentioned – we shipped more than 369,000 automobiles of the Audi brand. This represents an increase over the prior-year period of 6.8 percent. Despite the difficult economic conditions, the Audi Group achieved total revenue of 11.7 billion euros – very close to the level of the previous year.

At the same time, we continued to make substantial investments in our future. In addition to expanding our model and technology portfolio, the focus was on advance expenditure for the development of our production network. In particular against this backdrop, operating profit of 1.3 billion euros was 7.3 percent lower than in 2011. The resulting operating return on sales of 11.1 percent was once again above the strategic target corridor of eight to ten percent.

Once again this year, at the end of my speech I would like to draw your attention to our Annual Report 2012, which you received today at the information desk together with the documents for the Annual Shareholders’ Meeting. In addition to the print version in German, English and Chinese, the Multimedia Annual Report offers additional exciting content such as video and audio contributions relating to the magazine section. A special feature this year is that with a version of our Multi Media Interface adapted for the iPad®, you navigate faster, more easily and more conveniently through selected highlights of the app: intuitive control of a wide range of functions – just like the original in your Audi!

Now let’s dive into the world of the Multimedia Annual Report with a short trailer.

Thank you for your attention!