FRANKFURT -- Volkswagen's luxury unit Audi AG reaffirmed its guidance for flat 2004 earnings on Tuesday despite a 9.5 percent rise in first-half operating profit thanks to record vehicle sales.
The Ingolstadt-based carmaker, whose first-half operating profit reached 586 million euros ($707 million), said overall weak car markets and tough competition were keeping it cautious.
Net profit climbed by more than 16 percent to 336 million euros on a 7.7 percent rise in revenues to 12.3 billion.
"We're aiming for a strong overall earnings result," Audi AG Chief Executive Martin Winterkorn said in a statement.
A spokesman said this meant operating profits should remain flat at last year's level of 1.06 billion euros. Revenues should exceed the 23.4 billion euros generated in 2003.
"The second half still has a long way to go. Since car markets are weak and the competition is harsh, we want to remain cautious with our guidance," he said.
The same outlook was given last week, when Winterkorn said he expected flat 2004 profits despite a rise in revenues.
Since Audi figures are consolidated into the VW group, analysts said their main focus was directed at the unit's guidance.
"It's a confirmation that markets are unfortunately not so easy," said Fabian Kania of Helaba Trust, who rates VW at "underweight".
LAMBORGHINI SALES JUMP
Thanks to the launch of the new Audi A6 full-sized saloon and the A3 Sportback, the company reaffirmed its target of record Audi brand car sales this year despite the soft car markets and tough competition.
Audi recently said first-half deliveries to customers rose 0.6 percent to 389,970 cars on the back of improved sales of its A8 luxury limousine.
This figure doesn't include the additional 922 cars delivered by its high-performance sports car brand Lamborghini, up from 238 units last year thanks to strong demand for its Gallardo sports coupe.
Audi AG represents a major source of earnings for parent company Volkswagen, which last month slashed its 2004 operating profit forecast to 1.9 billion euros -- excluding roughly 400 million in one-off costs -- after heavy losses in North America.
Late in July, Volkswagen reported that first-half operating profits at its Audi Brand Group, which also includes VW's Spanish brand SEAT, rose 10 percent to 550 million euros.
By comparison, the VW Brand Group that includes VW, Skoda, Bentley and Bugatti brands posted operating profits of just 33 million euros, while Volkswagen's commercial vehicles division reported a loss of 134 million.