IHS Global Insight Perspective | |
Significance | Porsche has posted a net profit of 871 million euro for the first half of the of its financial year, an 84% y/y decline. |
Implications | The failed takeover of VW and the subsequent effective reverse takeover means that this result is mainly governed by accounting effects and has little to do with overall business performance. However, there are signs that the surrounding business environment may be improving marginally for Porsche with an operating profit of 329 million euro, during the period while revenue rose by 3.7% to 3.16 billion euro. |
Outlook | In the remainder of the financial year Porsche is expecting its net profit to be reduced by a number of external factors, not least that it is not participating in the capital increase planned by VW for the first half of 2010. Porsche SE's remaining share capital in VW will be diluted and the company's results will also be influenced by the number of new preference shares in VW issued and their issue price. |
Porsche Automobil Holding SE, the company that controls the sports car company Porsche AG and which was previously being used as the vehicle for the company's takeover attempt of the Volkswagen (VW) Group, posted an 84% year-on-year (y/y) decline in net profit to 871 million euro during the first half of the company's financial year (FY) from 1 July 2009 to 31 December 2009. However, this large decline in net profit had more to do with accounting effects than the actual operating performance following the after-effects of the failed attempt to acquire and maintain a controlling stake in Europe's largest passenger carmaker. Porsche said in a press release that it still expects negative earnings before tax for the full FY as a result of accounting effects, although some of these effects will offset each other. One of the main influences on Porsche SE's full-year financial results will be the deconsolidation of the VW Group from Porsche SE which occurred on December 2009 and the deconsolidation of the Porsche Zwischenholding GmbH group, which mainly comprises the carmaking side of the business Porsche AG. These structural changes have already been included in Porsche SE's six-month report. With Porsche now on its way to becoming fully consolidated within the VW Group by 2011, the company has sold a 49.9% stake in Porsche Zwischenholding GmbH to VW. As a result, the holding company Porsche SE received a figure of 3.9 billion euro which has already mainly been used to pay off debt, with Porsche's SE's net debt now having been reduced to 6.1 billion euro.
Porsche SE H1 FY 2009/10 Financial Results (Euro, mil.) | ||
H1 2009 | H1 2010 | |
Net profit | 5,619 | 871 |
Operating profit | 7,342 | 329 |
Revenue | 3,043 | 3,160 |
However, on the operating side of the business, which again mainly comprises Porsche AG's activities, the company did actually report some positive results. Porsche AG posted an operating profit during the period of 329 million euro, which translated to an operating margin of 10.4%. The unit's revenue also saw a positive increase of 3.7% y/y with sales rising to 3.16 billion euro. However, this was in spite of unit sales declining further still during the period to 33,670 units, suggesting a higher value model mix during the period in question. This was probably the result of this is period corresponding with the launch of the Panamera sports sedan. The Panamera sold 8,326 units between its launch in September 2009 and the end of the reporting period on 31 January. The Cayenne remained Porsche's best selling model with 13,454 units sold, representing a 19.8% y/y decline on the period during the previous year. Unit sales of the 911 came to 7,493 units (down 44.7%). Unit sales of vehicles from the Boxster model series, including the Cayman models, recorded 11.3% growth to 4,397 vehicles. Porsche stated that it continues to assume that unit sales for the full fiscal year 2009/10 will exceed the prior-year figure of 75,238 vehicles.
Outlook and Implications
As has been the case in recent years, Porsche Automobil Holding SE's results are, it seems, only marginally affected by its actual core business, the sports car company known as Porsche AG. Instead these latest first-half results from Porsche's own unique FY reporting period have been massively influenced by the machinations surrounding the company's failed attempts to take control of Europe's largest carmaker, VW. In the past, Porsche SE has posted massive net profit gains as a result of the rise in value of its VW shares and share options. Likewise when its takeover attempt went bad and it had to sell off options at less than their face value, the company posted big write-downs. These external factors will again play a sizeable part in Porsche SE's full 2009/2010 FY results. As Porsche said in its statement "Porsche SE is expected to be reduced by various factors in the second half of the 2009/10 fiscal year because it is not participating in the capital increase planned by Volkswagen AG for the first half of 2010." VW will issue up to 135 million preference shares to help finance the acquisition of a 49.9% stake in Porsche SE and the 19.9% stake that the company is planning to acquire in Suzuki. This will result in a dilution of Porsche SE's share in capital of VW, with Porsche going to state that "the impact on earnings will depend on the form that the capital increase takes and will also be influenced by the number of new preference shares in Volkswagen issued and their issue price." As yet, it is difficult to fully estimate the impact this will have on Porsche although the company is forecasting that the loss for the 2009/10 fiscal year will be in the low single-digit billion-euro figure. Eventually following the full consolidation in 2011, Porsche AG and SE's sales performance and financial data will be consolidated in the results of the VW Group and the company's results will align with VW's reporting period, which corresponds with the calendar year.