Audi saves Volkswagen from 9-Month pretax loss

FRANKFURT (Reuters) - Audi demonstrated once again just how important it is for Volkswagen AG, revealing on Friday its parent group would have posted a loss before tax in the first nine months were it not for the premium brand.

The car maker, based in the Bavarian city of Ingolstadt, said in a statement its pretax profit reached 1.4 billion euros ($2.1 billion) in the first nine months of the year, translating to healthy margin of 6.5 percent.

The entire Volkswagen group posted nine-month earnings before tax of only 1.07 billion euros, implying it would have posted a loss without the help of the maker of the A4 saloon.

Part of the reason for VW's low figure was a hefty 919 million euros in "other financial" losses from its industrial operations that the parent blamed on higher interest costs on discounted provisions as well as a drop in interest income and income from securities.

A spokesman for Audi declined to give any further details on why pretax profit surpassed its nine-month operating profit of 1.17 billion.

While the figures show that Audi continues to account for the bulk if not all of the earnings at Volkswagen -- particularly in leaner years -- it would likely not do so were it not for the economies of scale it enjoys by spreading investment costs over the entire group.

By comparison, independent premium carmakers BMW AG has said it is struggling to post a profit this year, while Daimler AG has said it expects Mercedes will only be profitable in the second half.

Many analysts have been calling for the two archrivals to cooperate closely.

For the fourth quarter Audi said its operating profit would exceed the 348 million euros earned in the third quarter, when it had to contend with ramp-up costs for its smallest and largest models, the A1 and A8 respectively.

"We expect an earnings performance that is higher than that of the third quarter," Audi finance chief Axel Strotbek said in a statement on Friday.

That would imply full-year operating profit of more than 1.52 billion euros versus the 2.77 billion it earned in 2008.

Audi, which now expects to sell over 900,000 vehicles this year, said it will have invested by the end of next year around 1.9 billion euros in its two German sites Ingolstadt and Neckarsulm.

It also plans to sell beginning in 2012 a limited series of its "e-tron" concept electric sports car that it presented at last month's Frankfurt auto show. Four electric motors, one on each wheel, propel the car to 100 kilometers an hour from a standstill in 4.8 seconds. Its lithium-ion battery is capable of a range of up about 250 km.

Source:Reuters.com - World News, Financial News, Breaking US & International News