German carmaker Audi lowered its guidance on Monday as it reported a drop in profits of 37.5% in the first half of the year, citing new U.S. tariffs, restructuring costs and struggling business in China.
Post-tax earnings came in at 1.3 billion euros ($1.5 billion) in the first six months of the year, the firm, which is part of the Volkswagen Group, announced, marking a third consecutive year-over-year decline in profits.
Back in 2022, the Munich-based carmaker – which also includes the brands Bentley, Lamborghini and Ducati – reported profits of 4.4 billion euros for the first half of the year.
Audi also lowered its forecast for the current year, with turnover expected to shrink by 2.5 billion euros to between 65 billion euros and 70 billion euros. Meanwhile, the company also expects a significantly lower return on sales.
However, the latest forecast does not yet take into account the trade agreement struck between the European Union and the U.S. a day earlier, which will see a baseline rate of 15% imposed on imports from the bloc.
Audi said it was currently assessing the expected fallout from the deal, with Chief Financial Officer Jürgen Rittersberger noting that details of the agreement have yet to be revealed.
In principle, however, the carmaker welcomes a deal, he said, as it enables the company to plan ahead.
The increased U.S. tariffs imposed in April alone burdened Audi with around 600 million euros in the first half of the year, Rittersberger said.
Unlike its competitor, BMW, Audi does not have its own plant in the U.S. and has not passed on the additional costs incurred by the tariffs to its U.S. customers.
Rittersberger did not yet say how Audi will proceed, but noted that the company will try to find the right compromise between price and volume.
Another reason for the current decline is the cost of restructuring the company, according to the chief financial officer.
Audi announced earlier this year that it would cut 7,500 jobs in Germany by 2029 and has already made provisions for this. These provisions burdened the results in the first half of the year with 600 million euros, although there were already initial positive effects from what the carmaker calls its future agreement, which offset half of this burden.
The current figures showed "how necessary the initiated transformation is," Rittersberger stressed, adding that Audi must "continue at full throttle."
In the medium term, Audi aims to save more than 1 billion euros per year, he said.
Before the figures were released, it had already become apparent that results might have plummeted, after sales had shrunk in the first half of the year, particularly in China but also in the U.S.
Both markets are currently challenging for many car manufacturers. In China, fierce price competition continues to intensify, especially in the electric vehicle sector, where Audi is placing its hopes in upcoming new models.
