Premium brand Audi reported solid financial results for 2019 despite slowing global sales, reporting an operating profit for the year. It also acknowledged 2020 was going to be a challenge prior to the coronavirus pandemic and is now uncertain how it will affect its results this year.
For 2019, Audi reported an operating profit and operating return on sales reached €4.5 billion and 8.1% on revenue of €55.7 billion. The company’s “Transformation Plan” contributed €2.5 billion to the company’s bottom line.
Unsurprisingly, much of the company’s profits came from the sale of sport-utility vehicles and its top-end models.
“We can be satisfied; Audi is competitive. In a very challenging environment, we focused on our strengths and stabilized our business. Our operating return on sales was above 7% in each quarter of 2019 and was within our forecast corridor for the full year,” said CEO Bram Schot in a statement.
Like so many other automakers, the company cancelled its annual meeting and press conference this year due to coronavirus concerns. Schot also took some time to address the pandemic and how it’s impacting Audi.
“We are in an exceptional situation for which there are no tried-and-tested solutions or simple recipes. We are focusing on protecting our employees, contractors and guests and making the right business decisions in this volatile environment,” he said. The company is shutting down its plants in Ingolstadt, Neckarsulm, Belgium, Mexico and Hungary in a controlled manner by the end of this week.
Returning to 2019, the company reported a slight uptick, 1.8% in sales to 1,845,573 vehicle from 1,812,485 in 2018. As mentioned, the company’s sport-utes and high-end vehicles, such as the all-electric Audi e-tron and the new Audi Q8, were “very well received by customers.”
The rise in sales translated to improved financial performance. The company’s revenue was up 3.9% compared with the previous year’s results. Additionally, the company’s operational profit was up as well, rising 28.5%.
This was driven by the improved Audi product mix, the increased operating profit of Lamborghini and successfully implemented ATP measures totaling €2.5 billion. The program for improved earnings that was implemented in 2018 is expected to free up a total of €15 billion for future investments by 2022.
Since the start of the program, the ATP has already generated an accumulated €4.4 billion and measures have already been identified for 80 percent of the overall target. The ATP is thus making a decisive contribution to improving the quality of earnings.
This year, Audi will introduce 20 models while continuing its electrification plans, resulting in five new all-electric models by the end of 2020. The brand will also grow its PHEV offering to a total of 12 models. A PHEV variant will then be available in more than half of the model series. The growth of its electrified offerings is will help the company with increasingly strict carbon dioxide regulations.
“The effects of the spread of the coronavirus on the economy and our business are uncertain. This makes a reliable forecast for the year 2020 almost impossible at present,” said Arno Antlitz, Member of the Audi Board of Management for Finance, China and Legal Affairs.