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Eye of Riyadh
Cars & Autos | Thursday 12 March, 2015 3:11 pm |

Audi CEO: “We delivered more in 2014 than promised”

With a new record for deliveries of more than 1.74 million automobiles, Audi for the first time increased its revenue to more than €53 billion in 2014. Operating profit amounted to €5.15 billion and the operating return on sales of 9.6 percent was at the upper end of the strategic target corridor of eight to ten percent. After taking increased financial income into consideration, profit before tax increased to approximately €6 billion. The return on sales before tax was 11.1 percent. By 2020, Audi plans to expand its
product range to 60 models. The brand with the Four Rings will therefore invest more than €24 billion in new products and technologies by 2019, and is
continually expanding its global production network. Worldwide, the Audi Group plans to recruit more than 6,000 new employees in 2015 to strengthen its workforce with experts as it moves along its strategic growth path. The company intends to deliver more premium cars than in the previous year once again in 2015.

At the Annual Press Conference held at its headquarters in Ingolstadt on Tuesday,
AUDI AG presented its key figures for financial year 2014 and an outlook for 2015.
Board of Management Chairman Rupert Stadler stated, “We delivered more in 2014
than promised. After a very positive start to this year, we aim to achieve a new
record for unit sales in 2015.” This year, the company will start the next stage of its
model initiative with the new Audi Q7, the new Audi R8 and the new Audi A4 family.

Audi delivered a convincing performance in 2014 despite a heterogeneous market
environment, and increased its unit sales in all regions. The Ingolstadt company set
new records for unit sales in a total of 50 countries. Worldwide, it sold 1,741,129 automobiles of the Audi brand to its customers (2013: 1,575,480), representing an increase of 10.5 percent (2013: 8.3 percent). Audi therefore significantly surpassed its original unit-sales target of 1.7 million automobiles. The Audi Group increased its revenue to €53,787 million (2013: €49,880 million): growth of 7.8 percent compared with the previous year.

Despite high advance expenditure for the expansion of international production
structures as well as for new models and technologies – in particular to fulfill increasingly strict CO2 regulations around the world – the Audi Group increased its
operating profit by 2.4 percent to €5,150 million (2013: €5,030 million). At the same time, the company invested approximately €4.5 billion in 2014, nearly €1 billion more than in 2013. The operating return on sales was 9.6 percent (2013: 10.1 percent), and thus at the top end of the strategic target corridor of eight to ten percent.

The Audi Group’s selling expenses increased at a lower rate than revenue: plus 5.5 percent to €4,895 million (2013: €4,641 million), although the company delivered significantly more automobiles to its customers and supplied its dealers with numerous new models.

Financial income of €841 million was significantly higher than in 2013 (€293 million). It includes Audi’s share of the operating profit of the Chinese joint-venture company FAW-VW Automotive Company, which is consolidated at equity. Overall, the Audi Group increased its profit before tax by 12.5 percent to €5,991 million (2013: €5,323 million). Return on sales before tax improved from 10.7 percent in 2013 to 11.1 percent last year, providing further evidence of the company’s strong profitability.

Board of Management Member for Finance Axel Strotbek stated to approximately
350 journalists in Ingolstadt: “Our key financials show that we are preparing systematically for the future and nevertheless operating very profitably.” Despite
high levels of advance expenditure, the company achieved an operating return on sales at the upper end of its strategic target corridor of eight to ten percent.

From January through December 2014, Audi invested nearly 25 percent more than
in the previous year, setting a new record with an amount of over €4.5 billion. By 2019, the company plans to invest a total of €24 billion. The focus will be on technical innovations and new models. In addition, the manufacturer of premium automobiles intends to expand its worldwide production structures. Once again, all investments are to be funded out of the cash flow from operating activities.

“In view of our upcoming record investment, we will continue our systematic focus on efficiency, because we want to achieve a net cash inflow of more than €2 billion in 2015,” stated Strotbek. Despite increased investment, the net cash inflow of €3.0 billion in 2014 was only slightly lower than the prior-year figure of €3.2 billion.

By 2020, Audi intends to expand its product range from the current 52 to 60 models. At the Annual Press Conference, Board of Management Member for Technology Ulrich Hackenberg explained, “The new models Audi Q7, Audi R8 and Audi A4 are the highlights of our model initiative in 2015.” The company will continue to thrill its customers worldwide with pioneering technologies and progressive automobiles with the sporty Audi DNA.

At the beginning of this year, Audi presented the new Audi Q7 in Detroit; this SUV is
up to 325 kilograms lighter than its predecessor and about 26 percent more efficient. The new Audi Q7 e-tron quattro debuted at the Geneva Motor Show last week. It is the first plug-in hybrid with a diesel engine and quattro drive. In the coming years, Audi will systematically electrify the drive trains of its entire model portfolio.

Audi is a pioneer of piloted driving. The company has often demonstrated that it has
a full mastery of complex technologies. In October 2014, an Audi RS 7 piloted driving concept lapped the Grand Prix racetrack in Hockenheim – without a driver and at speeds of up to 240 km/h. In early January, the brand with the Four Rings set a new record. Journalists traveled approximately 900 km from Silicon Valley to the Consumer Electronics Show in Las Vegas in an Audi in piloted-driving mode. The Audi A7 Sportback piloted driving concept performed exceptionally well in this long-distance test under real everyday conditions. Audi thus once again demonstrated its piloted driving technologies are ready for series production.

Innovations are based on ideas from the employees. The company therefore strengthened its teams of experts in the fields of lightweight construction, connectivity and electric mobility once again last year: “We recruited about 4,500 new employees in Germany,” said Thomas Sigi, Board of Management Member for Human Resources. “With their know-how, we will shape the mobility of tomorrow and will provide new impetus.”

Meanwhile, more than 80,000 people work for the Audi Group worldwide. The company grew by 5,732 employees in 2014. At the Annual Press Conference, the
Audi Board of Management thanked all of the employees for their great efforts and
commitment. Once again, AUDI AG is letting its workforce participate in the company’s success of the previous year: Employees at the sites in Germany paid according to collective bargaining agreements will receive an average profit-sharing bonus of €6,540.

In order to strengthen its workforce with qualified personnel as it moves along its strategic growth path, Audi will continue to recruit in 2015. In Germany alone, the brand with the Four Rings intends to bring 4,000 new employees on board this year;
worldwide, more than 6,000 new employees will enhance the brand’s “Vorsprung durch Technik.”

The company plans to continue its growth in the current year and to deliver
significantly more automobiles of the Audi brand than in 2014. A challenging factor
in this respect is that the economic environment is hard to forecast in 2015. At the same time, Audi has growing advance expenditure for new production capacities, innovative technologies and attractive cars. Another factor is a significant increase in
the intensity of competition in key markets and the technological shift within the automotive industry towards alternative drive systems, in particular to fulfill increasingly strict CO2 regulations worldwide.

Along with the targeted growth in unit sales, the Audi Group’s revenue will also rise,
depending on general economic conditions. Once again, the company anticipates an
operating return on sales within the strategic target corridor of eight to ten percent.

In order to support the quality of its growth strategy, the company has for many
years been increasing its efficiency and optimizing its costs. Audi also works continually on improving the quality of its revenue. In addition, the company is currently strengthening these measures with a fitness program to ensure that it
maintains its success over the long term vis-à-vis its premium competitors.
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