Audi Braces for Fourth-Quarter Earnings Hit Over Model Costs – New York Times

Posted: Friday, July 28, 2017

BERLIN — Audi, Volkswagen’s main profit driver, is bracing for earnings to take a hit in the fourth quarter after posting a higher profit between April and June, citing development costs for models such as the redesigned A6 and A7 models.

Second-quarter operating profit at Audi grew 5.3 percent to 1.44 billion euros ($1.68 billion) as the carmaker cuts R&D and other fixed costs, lifting the operating margin to 9.1 percent from 8.7 percent, within Audi’s 8-to-10 percent target range, it said on Friday.

“Advance payments (for new model launches) will, especially in the fourth quarter, be reflected more strongly in results and cash flow,” finance chief Axel Strotbek said in a statement, without being more specific.

Having slipped behind rivals Mercedes-Benz and BMW on global sales last year, Audi hopes to regain momentum with a series of launches including an electric sport-utility vehicle (SUV) to take on Tesla’s Model X, the all-new Q4 and Q8 SUVs and redesigns of the high-end A6, A7 and A8 model lines.

Audi said it expects stronger model sales in the second half of the year after deliveries fell 4.7 percent between January and June to 908,950 cars, with a 12 percent slump in China outweighing growth in Europe and the United States.

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