AUDI AG for the Fiscal Year from January 1 to December 31, 2018
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2018 Annual Report e-valuation Production of China electric vehicles EUR 25 trillion 6,843,000 and plug-in hybrids through 2021 Worldwide investments (overall market in sustainable assets forecast) 2016 USA 3,058,000 Germany 2014 2,247,000 2012 Audi 2018 Annual Report Audi Group Key Figures 2018 2017¹) Change in % Production Automotive segment Cars ²) 1,871,386 1,879,840 –0.4 Engines 1,955,532 1,966,434 –0.6 Motorcycles segment Motorcycles 53,320 56,743 –6.0 Deliveries to customers Automotive segment Cars 2,081,418 2,105,084 –1.1 Audi brand ³) Cars 1,812,485 1,878,105 –3.5 Lamborghini brand Cars 5,750 3,815 50.7 Other Volkswagen Group brands Cars 263,183 223,164 17.9 Motorcycles segment Motorcycles 53,004 55,871 –5.1 Ducati brand Motorcycles 53,004 55,871 –5.1 Workforce Average 91,477 90,402 1.2 Revenue EUR million 59,248 59,789 –0.9 Operating profit before special items EUR million 4,705 5,058 –7.0 Operating profit EUR million 3,529 4,671 –24.4 Profit before tax EUR million 4,361 4,717 –7.5 Profit after tax EUR million 3,463 3,432 0.9 Operating return on sales before special items Percent 7.9 8.5 Operating return on sales Percent 6.0 7.8 Return on sales before tax Percent 7.4 7.9 Return on investment (ROI) Percent 10.0 14.4 Ratio of capex ⁴) Percent 5.9 6.5 Research and development ratio Percent 7.1 6.4 Cash flow from operating activities EUR million 7,013 6,173 13.6 Net cash flow ⁵) EUR million 2,141 4,312 –50.4 Balance sheet total (Dec. 31) EUR million 65,598 63,680 3.0 Equity ratio (Dec. 31) Percent 45.3 44.2 1) Some of the prior-year financial key figures have been adjusted to reflect the first-time adoption of IFRS 9 and IFRS 15 (see also the comments regarding IFRS 9 and IFRS 15 in the Notes to the Consolidated Financial Statements). 2) Including vehicles built locally by the associated company FAW-Volkswagen Automotive Company, Ltd., Changchun (China) 3) Including delivered vehicles built locally by the associated company FAW-Volkswagen Automotive Company, Ltd., Changchun (China) 4) Investments in property, plant and equipment, investment property and other intangible assets (without capitalized development costs) according to the Cash Flow Statement in relation to revenue 5) Taking into account the transfer of the minority interest in Volkswagen International Belgium S.A., Brussels (Belgium), to Volkswagen AG, Wolfsburg, in 2017 2 8 83 084 Report of the Supervisory Board 089 Finances 089 Combined Management Report of the Audi Group and AUDI AG for the fiscal year from January 1 to December 31, 2018 173 Consolidated Financial Statements of the Audi Group for the fiscal year from January 1 to December 31, 2018 INFORMATION All figures are rounded off, which may lead to minor deviations when added up. The figures in brackets refer to the figures for the previous year. Internet sources refer to the status as of February 20, 2019. The Management Report contains forward-looking statements relating to anticipated developments. These statements are based upon current assessments and are by their very nature subject to risks and uncertainties. Actual outcomes may differ from those predicted in these statements. Dr.-Ing. Herbert Diess Chairman of the Supervisory Board 084 2018 was a year of major challenges and new departures for the Audi Group. In the second half of the year in particular, the switch to the new WLTP test cycle resulted in a restricted sales range. On top of this was the political debate about banning the use of diesel vehicles, along with a downturn in important passenger car markets. Financial burdens arose from a fine imposed under the administrative order by the Munich II pub- lic prosecutors in connection with the diesel crisis. When Chairman of the Board of Management Rupert Stadler was accused and taken into custody on June 18, 2018, this came as a shock to the entire Audi and Volkswagen family. The active commitment of everyone at Audi was especially im- portant in 2018. The Supervisory Board would particularly like to thank all employees of the Audi Group for this. I am con- vinced of the potential of the brand with the Four Rings. With its capabilities and spirit, the Audi team will rise to the forth- coming challenges. Every effort must be made to achieve this. The Supervisory Board is supporting the Board of Management with the repositioning of Audi. It is careful to ensure that the lessons learned in the past are firmly anchored in the corpo- rate culture and strategy. The new Chairman and his manage- ment team will define and substantiate the action areas, goals and approach in the corporate strategy in time for the Audi 2019 Annual General Meeting. The Supervisory Board was newly elected in 2018. The Supervisory Board was newly constituted last year. With effect from the close of the Annual General Meeting on May 9, 2018, Senator h. c. Helmut Aurenz, Berthold Huber and Max Wäcker left the Supervisory Board. The Supervisory Board and Board of Management have always appreciated their construc- tive advice and critical questions. The Supervisory Board would like to express its deep gratitude to these former members in acknowledgment of the work they performed. At its constituent meeting on May 9, 2018, the Supervisory Board elected me as its Chairman and Peter Mosch as Vice Chairman. The Negotiating Committee, the Presiding Commit- tee, the Audit Committee and the “Diesel” Committee were also elected. The Presiding Committee as well as all other committees were also constituted and commenced work. The Board of Management gave regular, up-to-date, compre- hensive accounts of its actions to the Supervisory Board. The Supervisory Board considered the economic framework and the Company’s business development and policy as well as its 085 risk management and risk situation at ordinary meetings of the Supervisory Board convened each quarter, as well as on the basis of regular oral and written reports from the Board of Management, and consulted with the Board of Management closely on these matters. At its four ordinary meetings in 2018, the Supervisory Board also considered at length the opportunities and risks for Audi in key markets, in particular China, the United States and European markets. In that connection it explored subject ar- eas such as how to assure a sustainable return and the WLTP test cycle. The Supervisory Board also held discussions with the Board of Management on progress with the digitalization and electrification of vehicles. It approved a new remuneration system for the members of the Board of Management and, together with the Board of Management, routinely determined the content of the Declaration of Conformity pursuant to Section 161 of the German Stock Corporation Act (AktG). In agreeing to the plans for human resources, financial and investment planning, the Supervisory Board once again con- firmed the Board of Management’s strategic decisions. The diesel issue, in particular concerning the V6 3.0 TDI en- gine, as well as human resources decisions in addition account- ed for a significant portion of the Supervisory Board’s work in the year under review. The Supervisory Board was kept con- stantly informed of the diesel issue by the Board of Manage- ment in the past fiscal year, both in writing and orally. In this connection the Supervisory Board held six extraordinary meet- ings in the past fiscal year. In addition to its four ordinary meetings, the Presiding Committee of the Supervisory Board held five extraordinary meetings in 2018. All Supervisory Board members were present at more than half of the meetings. The average attendance rate in the past fiscal year was 94.1 percent. The Negotiating Committee did not need to be convened in 2018. The “Diesel” Committee oversees and supports the Board of Management in its investigation and reappraisal of events related to diesel issues. It also prepares the Supervisory Board’s consultations and resolutions on diesel issues. The “Diesel” Committee came together for four meetings in the 2018 fiscal year. 086 The Audit Committee met once per quarter in the past fiscal year and devoted its attention mainly to risk management as well as compliance and auditing work. In addition, the Audit Committee concerned itself with the 2018 Interim Financial Report prior to its publication and the preparatory work for the 2018 Annual Financial Statements. It also advised on the independence of the auditor, the findings of additional audits commissioned and the situation of the Company at the end of 2018. It passed the necessary resolutions for putting the auditing of the Annual Financial Statements out to tender. “I am convinced of the potential of the brand with the Four Rings. With its capabilities and spirit, the Audi team will rise to the forthcoming challenges.” Upon the proposal of the Supervisory Board, the Annual General Meeting of AUDI AG appointed PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft as audi- tor of the accounts for the 2018 fiscal year. The auditor of the accounts confirmed the Annual Financial Statements of AUDI AG, the Consolidated Financial Statements of the Audi Group as well as the Combined Management Report of the Audi Group and AUDI AG for the 2018 fiscal year, and in each case issued its unqualified certification with an additional note. The auditing firm’s representatives explained the key findings of their audit in detail at the meetings of the Audit Committee and Supervisory Board. According to information supplied by the auditing firm, there were no circumstances that might give cause for concern about the auditor’s partiality.