IHS Global Insight Perspective | |
Significance | Porsche has reported a significant decline in provisional revenue of 14.3% year-on-year (y/y) in the first half of its financial year (1 August 2008-31 January 2009). Porsche forecasts that sales for the six-month period would be down by around 27.3% y/y to 34,000 units. |
Implications | The better performance of Porsche's revenue in comparison to sales was attributed to an enhanced model mix, although it is likely that the company also benefited as a result of share dealings and dividends relating to its stake in VW. |
Outlook | One of the key factors in Porsche's acquisition of VW is to lessen its exposure to the kind of global recession that brought the company close to bankruptcy in the early 1990s. The acquisition means that Porsche will have the scale and diversity of market and segment representation that will allow it to emerge from the current crisis—albeit with significant falls in sales volume and revenue—in robust shape. |
In a statement regarding preliminary sales and revenue results for the first half of its fiscal year (FY; 1 August 2008-31 January 2009) Porsche said that it "was not able to escape the general downward trend in the global automotive industry". The company said that its provisional revenue figure for the period would be in the region of 3 billion euro which would represent a 14.3% year-on-year (y/y) decline. At the same time Porsche also posted a provisional sales figure for the period of 34,000 units, which represented a 27.3% y/y decline on the figure of over 43,000 units that was recorded during the same period last year. The figures were announced by the President and Chief Executive Officer of Porsche Automobil Holding SE, Dr. Wendelin Wiedeking, at the Annual General Meeting of the Company in the Porsche-Arena, Stuttgart.
The final results for the period will not be officially published until Porsche SE publishes its official half-yearly accounts in March, as according to the International Financial Reporting Standard (IFRS); the Volkswagen (VW) figures for the fourth quarter 2008 still have to be considered and are not yet available. Porsche now holds a majority stake in the VW Group of 50.76% which the sports carmaker confirmed on 5 January.
Porsche said that enhanced development of the company's revenues in comparison to vehicle sales in the first half of the financial year was attributable to changes in the company's model mix. The company sold a higher share of its flagship 911 model during the period as a result of the launch of the revised version of the 997-series 911 model, which was available with Porsche's double-clutch PDK transmission for the first time. At the same time the Boxster entry-level model accounted for a smaller percentage of overall sales. The 911 sold 13,500 units during the period in comparison to a figure of 16,263 units in the first half of the FY. Sales of the Boxster suffered a significant slump, declining to approximately 3,900 units, in comparison to the figure of 9,835 units sold during the equivalent period in FY 2007/08. However, the Boxster and the Cayman models will have revised versions coming out into the market in the first weeks of February and these should partially help to boost sales in the second half of the financial year. The company's Cayenne sport utility vehicle (SUV) showed relatively robust performance during the first six months of the FY, selling 16,600 units during the period, down from 20,638 units during the equivalent six-month period last year.
Porsche reported that the decline in its sales markets was remarkably consistent on a global basis. Sales in Germany are expected to have reached 4,150 units during the period, following 5,630 units in the same period last year. In North America the corresponding figure is expected to be 11,850 units (previous year: 16,209 units) and in the rest of the world roughly 18,000 units (previous year: 24,897 units).
Outlook and Implications
Porsche has reported provisional sales and revenue figures for the first half of its financial year that indicate it has suffered in line with the rest of the global automotive industry a significant collapse in revenues and sales, during the period. It should be noted that Porsche's first-half FY figures correspond almost exactly with the inception of the global economic downturn which emerged in September and October. As a result, the provisional figures of a 14.3% decline in revenues and a 27.3% decline in revenues should be viewed in the context of this period. Porsche's majority stake in VW is earning the company substantial revenues in dividends, while it has also earned significant sums through the shrewd timing if its share acquisitions in VW.
In FY 2007/08, the company posted a 7.8 billion euro gain in its share dealings in VW, comprising 6.83 billion euro made from trading in VW shares—eight times what it made from selling cars—alone, plus another billion euro from the rising value of its VW stake. Porsche has made its enormous financial investment in VW in order to benefit from VW's volume and its commitment and investment to lowering the average CO2 emissions of its passenger car fleet. However, perhaps the key factor in the acquisition was to lessen its exposure to the collapse in premium car sales in the kind of global recession that brought Porsche to near bankruptcy in the early 1990s. The acquisition means that Porsche will have the scale and diversity of market and segment representation that should allow it to emerge from the current crisis, albeit with significant falls in sales volume and revenue, in robust shape in comparison to rival companies.