Audi must work with Volkswagen to restructure business, CFO says
Audi Faces Restructuring Amid Global Challenges
By Rachel More and Christina Amann
Weak Second Quarter Performance
BERLIN, July 27 (Reuters) - Volkswagen's premium brand Audi must work with the group towards a comprehensive restructuring, the subsidiary's finance chief said on Monday, after reporting a weak second quarter hit by falling sales in China and the United States.
"Global challenges are increasing the pressure to act," Audi CFO Juergen Rittersberger said.
Need for Realignment
"To remain competitive on the global stage, we must work together with the Volkswagen Group to realign our business model and implement large-scale structural improvements."
Plant Closures and Capacity Reductions
Audi's Neckarsulm plant in south-west Germany is one of four German plants belonging to Volkswagen threatened with possible closure after 2030, as the group battles high costs, rising competition from China and tariff headwinds.
Progress in Reducing Capacity
Rittersberger said Audi was already making progress in reducing capacity.
Neckarsulm Plant Adjustments
Neckarsulm currently operates at an annual production capacity of 225,000, around 75,000 below previous years. The company has also agreed to cut the night shift at the site, which produces exclusively combustion-engine cars.
"We are continually working to adapt capacity to the market environment," Rittersberger said.
Financial Performance and Outlook
Revenue for Volkswagen's Audi group, which also includes sports-car maker Lamborghini, luxury brand Bentley and motorcycle maker Ducati, fell by 12.5% year-on-year to €15.0 billion ($17.10 billion) in the second quarter.
Operating profit fell by 3% to €533 million, making for a profit margin of 3.6%, far below Audi's targeted range of 5 to 7% this year.
Guidance Cut and Market Difficulties
That is also lower than previously forecast after the company cut its guidance for the year on Monday, citing difficulties in China and conflict in the Middle East.
Volkswagen Group Results and Future Talks
Volkswagen reported its second-quarter results on Friday. The group's profit slid by 9.5% but analysts pointed to some signs of stabilisation, setting the scene for difficult talks with labour representatives as CEO Oliver Blume seeks to ramp up job cuts.
($1 = 0.8772 euros)
(Reporting by Rachel More and Christina AmannEditing by Linda Pasquini, Kirsten Donovan)
