FRANKFURT (Reuters) -- The luxury Audi unit of Volkswagen said on Tuesday its pre-tax profit had fallen 10.6 percent in the first half of the year and added it was becoming more difficult to match previous years' profits. Audi, which is based in the southern German town Ingolstadt and generated close to a third of parent group VW's profit last year, said its first half pre-tax earnings fell to 505 million euros ($571 million), hit partly by the continued strength of the euro.
"The macro-economic conditions are making it increasingly difficult to match the high full-year earnings of recent years," Audi said in a statement. It said it expected no lasting economic recovery in western Europe before the start of 2004.
The company, which said it still expected record car sales this year, posted pre-tax profit of 1.25 billion euros in 2002 but has said before it may struggle to reach that level again this year due to the strong euro.
Audi sold 4.1 percent fewer cars in Germany, Europe's biggest car market, in the first six months than the same stage a year ago, although it maintained its 7.4 percent market share.
Unit sales also declined in some other European markets and in the United States, although booming sales in China, where it started assembling A4 saloons earlier this year, meant sales outside Germany rose overall in the first six months.
Audi, which recently revamped its small A3 hatchback and high-margin A8 executive saloon, said group revenues were up 1.8 percent to 11.45 billion euros.
VW, which expects its profits to fall this year, said late last month its operating profit had more than halved in the second quarter due to a strong euro, new product costs and slumping demand.