Axel Strotbek Member of the Board of Management of AUDI AG Finance and Organization. Speech at the Annual Press Conference Ingolstadt, March 9, 2010

Transcription

1 Axel Strotbek Member of the Board of Management of AUDI AG Finance and Organization Speech at the Annual Press Conference Ingolstadt, March 9, 2010 Please note: Check against delivery Chart: Logo As our Board of Management Chairman Rupert Stadler has just explained, we are now all looking back on what must have been the most difficult year in the history of the automotive industry. The slump in global demand for cars precipitated by the financial and economic crisis continued unabated at the start of Above all the Western industrial nations, Central and Eastern Europe, and Japan witnessed an unprecedented downturn in sales. High refinancing costs, loan defaults and falling residual values on the used car market also piled the pressure on the entire industry. In order to stabilize sales of cars and support the automotive industry, many countries responded by introducing state subsidy programs. These measures produced a noticeable revival in demand for cars in major sales markets such as Germany, France and China above all in the second half of the year, benefiting mainly the mini and small car segments. Premium brands such as Audi therefore received only a minimal boost from state measures. On the other hand, the overall market remained weak in such countries as Spain and the United States. In the period under review, vehicle sales slumped in these countries by around one-fifth compared with the already low prior-year level. The reversal in the Russian market, which had previously been experiencing strong growth, was even more dramatic, with the sales volume of all manufacturers halved within the space of just one year.

2 AUDI AG Annual Press Conference, March 9, 2010 Page 2 Overall, despite the high levels of demand in China, there was a renewed fall in car sales worldwide of around six percent in the 2009 fiscal year, to 52.4 million passenger cars. By contrast, the Audi brand saw its deliveries of vehicles worldwide slip by only 5.4 percent in the past fiscal year; it was therefore able to improve its strong competitive position in many markets. Furthermore, the Audi Group posted a significantly positive operating profit in all reporting quarters. Let me now look in greater detail at the healthy development in the key financial ratios. I would like to start with the major items in the Income Statement. Chart: Revenue of the Audi Group The revenue of the Audi Group in the past fiscal year was down on the prior-year record figure, at EUR 29.8 billion. This is mainly attributable to the downturn in vehicle sales prompted by the economic situation, as mentioned before. There were added burdens from exchange rate effects, particularly from the pound sterling and the Russian rouble. Chart: Cost of sales We cut the cost of sales by over 11 percent in the same period, and thus compensated almost entirely for the decline in revenue. We already scaled back our production operations in line with the lower level of demand at the onset of the global economic crisis and intensified our continuing efforts to optimize cost structures. Chart: Gross profit Thanks to this farsighted corporate steering approach and the individual measures taken, gross profit for the Audi Group amounted to around EUR 4.2 billion in The gross margin of around 14 percent consequently almost reached the previous year s high level. Chart: Operating profit The distribution costs fell to EUR 3.1 billion in the period under review, largely as a result of the drop in sales volume. Administrative expenses were unchanged at around EUR 300 million. The fall in the other operating result stemmed mainly from the fact that although earnings from the settlement of hedging transactions remained clearly positive they were down compared with the previous year.

3 AUDI AG Annual Press Conference, March 9, 2010 Page 3 Overall, the Audi Group therefore posted a significantly positive operating profit of EUR 1.6 billion in the past fiscal year despite the difficult economic environment. This major achievement is the outcome of our corporate strategy of sustained growth. It also serves as further proof that our Company is fundamentally sound and competitive. Chart: Analysis of operating profit I would now like to look at the main driving forces behind the profit performance in greater detail. As you can see here, numerous factors had a negative effect on our profit in the past fiscal year: As I have already mentioned, the cyclically induced drop in sales of our vehicles had a big impact on the Income Statement. Furthermore, shifts in the mix affected profit in a variety of ways. The profit performance was reduced in particular by the lower deliveries of the A6 and A8 car lines due to their advanced life-cycle, but we registered considerable demand especially for the A5 and Q5. This also brought about a shift in the engine mix towards our smaller-displacement turbocharged engines. The numerous measures that we initiated at an early stage to support our dealer and service organization and the provisions that we made to guard against all currently discernible risks also affected the profit performance. Exchange rate effects, particularly from the pound sterling and the Russian rouble, led to a further reduction in the operating profit. These burdens prompted us to step up our efforts on the costs side quite considerably. In the area of product and production costs, we again managed to secure major cost savings through technical improvements and by systematically pushing ahead with our module strategy. The development in raw material prices was also positive. Our efforts are of course not limited just to the product and production area. We have also made significant progress with fixed costs, particularly with the cost items that can be influenced. All in all, we have therefore succeeded not just in absorbing the major negative effects on profit through cautious, well-disciplined cost management, but have at the same time ensured a lasting improvement in our long-term competitiveness. Thanks to our farsighted corporate management approach, we thus impressively demonstrated the profitability of the Audi Group in And we achieved this in extremely difficult conditions. We had to take account of the

4 AUDI AG Annual Press Conference, March 9, 2010 Page 4 major fall in demand in Western industrial nations on the one hand and the strong growth in China on the other. Chart: Profit before tax The lower level of market interest rates for investing cash and cash equivalents was the main factor behind the fall in our financial result to EUR 324 million. Overall, we therefore posted an impressive profit before tax of more than EUR 1.9 billion in the 2009 fiscal year. Chart: Key financial ratios The Audi Group s sustained high profitability is also reflected in its key financial ratios. Despite the massive burdens caused by the financial and economic crisis, we thus achieved an outstanding operating return on sales of 5.4 percent and a return on sales before tax of 6.5 percent. The high return on investment, which reached 11.5 percent for the same period, is no less impressive. The Audi Group was therefore one of the most profitable premium-segment automotive manufacturers in the world in I would now like to explain the development of the main cash flow figures and the net liquidity. Chart: Cash flow from operating activities Despite the fall in pre-tax profit prompted by the cyclical downturn, we generated a cash flow from operating activities of more than EUR 4.1 billion in 2009, almost on a par with the previous year s high figure. This successful development owes a great deal to our prompt action to reduce inventories and optimize stock management. We were consequently able to reduce the level of tied-up capital even further. Chart: Net cash flow We maintained a high level of capital expenditure of around 1.8 billion euros in the past fiscal year to create the basis for our company s future growth. The focus of our activities was on the one hand seamlessly continuing our product initiative, and on the other hand further optimizing conventional drive concepts, systematic efficiency measures for the overall vehicle and the development of new mobility concepts such as electric and hybrid models. Thanks to our thorough investment management, in the past fiscal year we again succeeded in completing all capital projects on schedule and to the extent

5 AUDI AG Annual Press Conference, March 9, 2010 Page 5 planned, and did so entirely from our own resources. With a positive net cash flow of over EUR 2.3 billion, we furthermore generated a healthy surplus, which significantly exceeded the previous year s outstanding figure despite the more difficult conditions. This performance again serves to demonstrate our Company s impressive financial strength. Chart: Net liquidity As a result, we also boosted net liquidity by around 15 percent in the past fiscal year to almost EUR 10.7 billion. The financial cushion this gives us will enable us to continue investing extensively in new products and the technologies of the future in the fields of lightweight construction, drive technology and electrification once again, entirely from our own resources, without having recourse to external sources of financing. Chart: Key performance indicators As you can see from the performance indicators I have been presenting, we impressively demonstrated the Audi Group s crisis-proof constitution and its competitiveness in the past fiscal year. This was achieved thanks to our fresh and attractive range of products and the ongoing optimization of the Company s costs. And as soon as the crisis set in, we took swift, decisive corrective action in response to all discernible risks on the procurement and sales sides. We intend to keep to our course of farsighted, sustainable corporate steering as practiced in recent years. After all, we believe we will again be facing big challenges in The development in the economic environment, for example, remains difficult to predict. On the basis of our product strategy, we are nevertheless confident of restoring the pattern of growth of recent years and thus of recovering promptly from the hiatus induced by the global economic crisis. We again plan to deliver over one million Audi vehicles to customers as early as this year, with significantly higher revenue and operating profit than in Mr. Rupert Stadler will now be giving you some in-depth information about the further development of the Audi Group. Thank you! Slides: