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March 17, 2010

GERMANY: Porsche slashes debt on VW investment proceeds

Porsche has cut its debt and said that it expects to post a loss for the year.

Porsche has cut its debt and said that it expects to post a loss for the year.

Porsche said it still expects negative earnings before tax for the 2009/10 fiscal year due to ‘several accounting effects’; these include the deconsolidations that result from VW ‘s takeover of Porsche last year.

The profit of 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′.

The company also cut its debt on the back of the proceeds of VW ‘s investment in the sports car operations.

Porsche said its net debt at Jan. 31 had fallen to EUR6.1 billion from EUR11.4 billion on July 31, 2009, the end of its last fiscal year.

Volkswagen in December acquired a 49.9% stake in Porsche’s core sports car operations through a capital increase as part of a complex merger under Volkswagen ‘s leadership that is expected to be finalised in 2011.

Porsche received EUR3.9 billion from Volkswagen ‘s investment in the company, which it used mainly to redeem bank liabilities.

Porsche AG also reported first half (for fiscal year ended July 31 2010) a double-digit return on sales with an operating profit of 329 million euro. Revenue increased by 3.7 percent in relation to the comparative period of the prior year to 3.16 billion euro. Unit sales fell 1.7 percent to 33,670 vehicles.

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