VW's Audi Says Difficult To Match Profit Of Recent Years

BERLIN August 5, 2003; Dow Jones reported that Audi AG , the premium car brand of Volkswagen AG , Tuesday said it will be difficult to match recent earning levels, although it expects sell a record number of vehicles in 2003.

"The macroeconomic conditions are making it increasingly difficult to match the high full-year earnings of recent years," the company said in its interim report.

The likely decline in earnings comes despite the company's expectation of record car sales this year.

"For this sales success to filter through into the financial figures, we will need to optimize our internal cost structures further," the company said.

Audi's first-half net profit fell 25.1% to EUR289 million from EUR386 million. The drop was largely due to a 17.6% jump in distribution costs to EUR681 million from EUR579 million.

Distribution costs include marketing costs, such as sales incentives. The rise reflects the competitive pricing battle in the slumping auto industry.

Operating profit fell 15.7% to EUR535 million from EUR635 million a year ago.

First-half revenue, meanwhile, grew 1.8% on the year to EUR11.45 billion.

Audi sold 387,767 cars in the first half, a 1.4% increase on the 382,478 sold in the same period a year ago.

The company is seeking to improve internal processes and increase production efficiency to cut costs, a spokesman said.

The Inglostadt, Germany-based carmaker isn't planning to lay off staff or reduce production capacity, he said.

In 2002, Audi recorded a net profit of EUR774 million on sales of EUR22.6 billion. Last year, it sold 742,128 cars. Audi figures also include the sales of Lamborghini sports cars.

Company Web site: http://www.audi.com