Ingolstadt - Audi AG’s profitability slipped in 2014 as the luxury-car division of Volkswagen AG invested in adding manufacturing capacity and developing new models like the revamped Q7 sport-utility vehicle.
Operating profit narrowed to 9.6 percent of sales last year from 10.1 percent in 2013, Audi said on Tuesday in a statement. The margin this year will be within the manufacturer’s 8 percent to 10 percent target corridor.
“In 2014 we delivered more than promised,” Chief Executive Officer Rupert Stadler said in a statement distributed at a press conference at Audi headquarters in Ingolstadt, Germany. “After a very positive start into the current business year, we’re targeting a new sales record.”
To underpin expansion plans, Audi is spending about 4.8 billion euros ($5.2 billion) a year through 2019, a 9 percent increase from its previous rolling five-year budget. With models ranging from the $18 400 A1 hatchback to the $165 000 R8 sports car, the world’s second-largest maker of luxury autos is pushing to overtake No. 1 BMW by the end of the decade. Audi’s deliveries in the first two months of 2015 exceeded BMW’s by almost 4 300 vehicles.
Audi’s revenue last year rose 7.8 percent to 53.8 billion euros, while earnings before interest and taxes increased 2.4 percent to 5.15 billion euros. The brand is Volkswagen’s biggest earnings contributor and key to Wolfsburg, Germany-based company’s goal of overtaking Toyota as the world’s biggest carmaker.
VW said last month that efforts to increase earnings in 2015 might face economic headwinds in markets including Russia and Brazil. It forecast a profit margin in a range of 5.5 percent to 6.5 percent, compared with 6.3 percent last year.
In the first two months of 2015, Audi’s deliveries rose 7.4 percent to 260,250 autos. While that’s almost twice the projected growth in the global car market this year, Daimler AG’s Mercedes-Benz, the third-largest maker of luxury vehicles, narrowed the gap as sales jumped 14 percent to 246,135 cars. BMW’s two-month deliveries increased 5.7 percent to 255,981.
The profit margin at Mercedes last year amounted to 8 percent of revenue. BMW has yet to report earnings.
Audi said today it expects to deliver “significantly more” cars to customers this year, even as demand for the best- selling A4 model series is bound to slow ahead of a changeover. The revamped A4 will be unveiled at the Frankfurt auto show in September.
Bloomberg