Audi Cuts Guidance as Tariffs and Restructuring Hit Earnings
'The situation continues to be very challenging,' Audi Chief Financial Officer Juergen Rittersberger said. 'In addition to intense competitive pressure, the drastically increased U.S. import tariffs and expenses for Audi restructuring measures have impacted financial performance in the first half of the year.'
The company earlier this year agreed a deal with worker representatives that will see up to 7,500 job cuts over the next few years in addition to measures that aim to increase productivity, speed and flexibility at its German sites. The company plans to save more than 1 billion euros ($1.17 billion) annually in the medium term.
On Monday, Audi said it now expects revenue this year at between 65 billion and 70 billion euros compared with an earlier forecast of 67.5 billion to 72.5 billion euros.
It expects the operating margin at 5%-7%, from 7%-9% previously, and net cash flow at between 2.5 billion and 3.5 billion euros, from 3 billion to 4 billion euros.
The EU and U.S. on Sunday struck a new deal that will see the EU pay a 15% tariff across the board for goods that enter the U.S., including vehicles.
'The effects of the tariff deal that was recently struck between the US and the EU are currently being assessed,' Audi said Monday.
It reported first-half profit after tax of 1.35 billion euros, down from 2.15 billion euros in the same period last year, reflecting the restructuring measures and compounded by cost pressures related to the U.S. tariff situation.
Revenue rose 5.3% to 32.57 billion euros.
The company said deliveries of Audi-branded cars fell 5.9% to 783,531 vehicles, led by a 10% decline in China as the region continues to suffer from intense competition.
Audi is focusing on rapidly expanding its portfolio of electric vehicles and strengthening its setup in China with market-specific models, production and local partners. It will launch several new models in the country in the second half.
Audi deliveries in North America fell 9%, mainly due to challenging economic conditions and model changeovers, while deliveries in Europe, excluding Germany, fell 4%. Germany saw deliveries rise 0.7%.
It delivered a 32% increase in Audi electric-car deliveries globally on year to 101,381 vehicles.
Write to Dominic Chopping at dominic.chopping@wsj.com
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