Porsche forecast on Friday vehicle sales would clearly surpass 90,000 vehicles in its fiscal year to July after first-half sales and earnings easily beat analyst expectations.
Go deeper with GlobalData
Reuters said the luxury car maker is enjoying brisk sales of its new Cayman coupe and recently redesigned flagship 911 sports car and Boxster roadster, and chief executive Wendelin Wiedeking also promised shareholders he would do his utmost to keep earnings high, with the industry’s fattest profit margins, even though it faced “enormous” development costs this year.
The news agency said that Porsche stock, which has outperformed European car sector peers by over 6% since the start of 2005, rose 1.8% to €641.82 euros in afternoon trade, outpacing the car sector – it trades at just over 11 times this year’s estimated earnings, a discount to larger rival DaimlerChrysler’s nearly 13 times, according to Reuters data.
Reuters noted that the stock has outperformed despite Porsche’s controversial move last year to spend more than EUR3bn to become Volkswagen’s biggest shareholder, a step Wiedeking defended as necessary to protect business ties with VW.
Porsche has an 18.5% voting stake in Volkswagen – with which it makes sport utility vehicles and is developing hybrid engines – and an option to get 3.4% more, the report said.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataFinance chief Holger Haerter reportedly said Porsche intended to exercise the option at some unspecified stage but not take its VW stake beyond the roughly 22% it would then hold.
According to Reuters, Wiedeking brushed off criticism from foreign investors that the deal marked the worst kind of “Germany Inc.” mentality in which domestic firms close ranks to protect sleepy management.
“People accuse us of not being able to manage money. It seems financial investors claim this expertise for themselves, which is why they [say] only they can do the big deals,” he reportedly said.
“We know a bit about the automobile business and we know how to inject efficiency into the business,” he added, according to the report, noting it would be foolish for Porsche to build up its own production when other companies had loads of idle manufacturing capacity.
Porsche first-half earnings before tax rose 11.3% to EUR274m (US$335.5m), while profit after tax climbed 13% to EUR167.5m. Analysts polled by Reuters had on average expected pretax profit of EUR249m.
Revenues rose 15% to 3.25 billion euros amid a 16.8% rise in vehicle sales to 41,750 vehicles, also beating market expectations, the report added.
“Unit sales for all model series were above our expectations,” analysts at German bank LRP reportedly wrote in a note.
“The drop of 12.2% in unit sales (for the Cayenne SUV) is high at first glance, but Porsche has been able to reduce the downswing’s momentum,” it added, according to Reuters, maintaining its “outperformer” rating.
According to Reuters, Morgan Stanley, which rates Porsche “equal weight”, said it thought Porsche unit sales could rise to 99,000 this fiscal year from 88,379 last year and estimated full-year pretax of EUR1.22bn, down just 1% from the year before.
Wiedeking reportedly told shareholders Porsche would take a hit this year from huge costs of developing a fourth model line – the four-door Panamera due in 2009 – and hybrid engines with VW but added it was well placed to keep profits high.
“We will profit here from our forward-looking currency policy as well as from a further rise in efficiency, which remains a permanent topic for us,” he said. He added revenue would grow roughly in line with unit sales this year, according to Reuters.
