UPDATE 1-Audi Q1 profit falls but sees solid 2009 earnings

* Q1 operating margin declines 80 bp to 5.4 percent * Vehicle sales, revenue to drop in 2009

* Still expects to gain market share

FRANKFURT, April 27 (Reuters) - Volkswagen's (VOWG.DE) premium unit Audi AG (NSUG.DE)expects a significant 2009 profit even though first-quarter results declined sharply, it said on Monday.

Revenue fell 19 percent to 6.70 billion euros ($8.81 billion) while operating profit dropped 29 percent to 363 million, the Ingolstadt-based carmaker said in its quarterly report.

Its operating margin slimmed to 5.4 percent from 6.2 percent in the year-earlier quarter.

"The first quarter developed in line with our expectations and forms a solid basis for us to reach our target of posting a significant profit in 2009," Audi finance chief Axel Strotbek said in a statement.

Earnings, vehicle sales and revenue would decline in 2009, but the company maintained its aim of growing market share.

Audi had said in March it expects to mark its centennial anniversary with its first annual sales drop in 14 years and a "significant" fall in profits in 2009. To dampen the effect, it plans to cut capital expenditure by about 10 percent from 2.4 billion euros last year.

Prior to Volkswagen's publishing of its quarterly report last Wednesday, analysts had forecast on average Audi revenue would tumble 21 percent to 6.59 billion euros while first-quarter operating profit would plunge 81 percent to 96 million euros. [ID:nLL470959]

Morgan Stanley analysts last week wrote that if Porsche (PSHG_p.DE) wanted to raise cash by selling its core sports car business to its majority-owned Volkswagen unit then the considerable pile of cash at Audi would likely finance any deal.

Audi had automotive net cash at the end of the year amounting to 9.29 billion euros, while the comparable figure for parent Volkswagen was just 8.04 billion at the start of 2009.

It gave no first-quarter liquidity details on Monday.

Nearly 99.6 percent of Audi's listed 43 million shares are controlled by VW, which prefers to hold an annual general meeting every year and distribute a type of annual cash compensation equating to its own ordinary share dividend than simply squeeze out the remaining minority shareholders.

For a story on first-quarter results at VW's Scania unit click on [ID:nLR455488]

(Reporting by Christiaan Hetzner)