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Business

Audi earnings slump as margins crumble

German carmaker Audi has suffered a drop in earnings despite rising sales. A decline in margins added to higher costs, the luxury auto maker said in excuse of disappointing third quarter profits.

In the third quarter of 2012, Germany's top-of-the-range auto maker Audi earned 2.6 percent less per car it sold, as its operating margin sank to 10.5 percent from 13.1 percent compared with the July through September period last year.

The decline in profitability contributed to a falling operating profit for the quarter, shrinking to 1.33 billion euros ($1.71 billion) from 1.42 billion euros a year ago.

Surprisingly, Audi's overall revenues rose in that period, driven by the growth of sales to 363,000 cars, which was 14 percent more than last year.

In a statement, Audi attributed the slump in profit to higher costs as a result of the introduction of new models, the expansion of production, as well as bigger outlay for Research and Development.

In addition, the carmaker said the debt crisis in countries such as Italy and Spain was weighing on sales in these markets.

However, more cars were sold in the markets of France, Germany and Great Britain, Audi added, while the world's biggest car markets, the United States and China, continued to boom.

Therefore, Audi Chief Financial Officer Axel Strotbeck maintained the company's 2012 business outlook of planned sales of 1.4 million vehicles and an operating profit at the same level as 2011.

uhe/dr (Reuters, dapd, dpa)