Audi posts 3% fall in 2015 profit owing to emission scandal

By Staff Writer

Mar 04, 2016 08:59 AM EST

Audi AG, a German-based luxury car maker, reported a drop of 6.1% in its operating profit for 2015. The carmaker's profit after tax declined 3% owing to costs of repairing diesel engines related to emission scandal.

Audi posted a profit after tax of €4.3 billion, down 3% from €4.4 billion in the previous year. Profit, excluding tax, decreased 11.8% to €5.3 billion from €5.99 billion in the prior year. Operating profit amounted to €4.8 billion in the year 2015, a decrease of 6.1% from €5.15 billion in 2014.

Operating profit, excluding special items, dropped 0.3% to €5.13 billion from €5.15 billion in the previous year. However, annual revenues increased 8.6% to €58.4 billion from 53.8 billion in the prior year. The increase in revenue was due to rise in delivery rate and currency shifts.

Return on investment was 19.4% during 2015, compared to 23.2% in the previous year. Audi's return on sales, excluding tax, was 9%, down from 11.1% in 2014. Operating return on sales fell to 8.3% from 9.6% in the previous year. Annual operating return on sales, excluding one-time items, was 8.8%, down from 9.6% in the prior year.

Car production in 2015 increased 1.4% to 1,830,334 units from 1,804,624 units in 2014. Audi produced 55,551 units of motorcycles during the year 2015, up 22.5% from 45,339 units in the previous year.

The car-maker said that it will recall 170,000 units of 2005 to 2013 model as the US National Highway Traffic Safety Administration has warned about the defective airbags manufactured by Takata. This recall will adversely impact the company's balance sheet with negative one-time item totalling €70 million.

The luxury car-maker, which has been involved in the emission scandal, will recall roughly 2.3 million vehicles. Discussions are ongoing over repairing the affected cars so that they fulfil the US diesel emission rules. Bloomberg quoted Rupert Stadler, chief executive officer, who said that nearly 90% of the impacted cars are powered with 2 litre motors and that a software update will solve the emission problem.

The car-maker introduced the Q7 and Q2 models at the Geneva International Motor Show 2016. Audi expects new sales momentum with a fresh module of A4 sedan. The shares of Volkswagen, owner of Audi AG, increased 0.4% to €116.20 in Frankfurt stock exchange.

Volkswagen is in negotiation with authorities in the US regarding affected diesel-based cars. The affected vehicles include brands of Audi, Volkswagen, Skoda, SEAT and Porsche. The car-maker intends to invest €3 billion in 2016 to improve digital oriented technologies, self-driving vehicles and electric cars, as reported by MarketWatch.

Audi's results are impacted by the emission scandal. The repairing charges pose a threat to the company's balance sheet. In addition, the car-maker's profits are hurt by global financial crisis and challenges in the auto industry.

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics