Audi backed full-year guidance as it pushes ahead with cost cuts, but cautioned that the turbulent geopolitical and economic environment is having a noticeable impact on its business.
“Certainties of the past—such as stable sales markets and predictable conditions—no longer apply,” Chief Financial Officer Juergen Rittersberger said.
“We need to act urgently. We are therefore working on our cost structures and pressing ahead with efficiency measures.”
Audi group—which comprises the Audi, Bentley, Lamborghini and Ducati brands—last year outlined plans to cut up to 7,500 jobs over the next few years while also taking measures to increase productivity, speed and flexibility at its German sites. It hopes to save more than 1 billion euros ($1.17 billion) a year in the medium term to counter headwinds from U.S. tariffs and intense competition in China.
It has also recently undertaken a refresh of its model lineup to help spur growth, and further new models will continue to be launched this year, with new electric, plug-in hybrid and internal-combustion-engine cars tailored to core markets.
It recently unveiled the E7X, the second model from its China-exclusive AUDI brand, with several more models designed exclusively for China expected later.
A new Audi Q9 flagship SUV targeting North American customers will be launched in the summer and the entry-level electric Audi A2 e-tron for European consumers will be launched in the fall, on top of further new models of different drive types for global markets this year.
“Customers’ expectations are increasingly diverse from region to region,” Chief Executive Gernot Dollner said. “Market-specific solutions and models are a necessity.”
The German automaker, which is part of Volkswagen Group, on Tuesday reported operating profit of 588 million euros ($687.5 million) in the first quarter, up from 537 million euros in the same period a year prior, as revenue fell 8.1% to 14.18 billion euros.
It registered an operating margin of 4.2%, up from 3.5%, and net cash flow of 883 million euros.
It still expects revenue this year to land at between 63 billion and 68 billion euros, with an operating margin of 6% to 8% and net cash flow of between 3 billion and 4 billion euros.
The potential impact from a further escalation in the Middle East can’t currently be reliably assessed and therefore isn’t included, it said.
It delivered 360,106 Audi-branded vehicles in the quarter, down 6.1% on year, led by a 12% decline in China amid model changeovers and continued intense competition. Deliveries in North America fell 27%, mainly due to tariffs and the end of subsidies for electric cars.
Deliveries in Europe and its home market of Germany both grew.
In overseas and emerging markets, customer deliveries fell over 6% to 23,501 cars, with the Middle East conflict hitting local deliveries, it said.
All-electric Audi group deliveries declined slightly overall, but Audi-branded plug-in hybrids saw year-on-year growth.
Write to Dominic Chopping at dominic.chopping@wsj.com
