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July 11, 2016

Porsche eyes healthy profit margin

Porsche aims to keep its profit margin running at a double-digit percentage of sales in the coming years, benefiting from more efficient production while boosting spending on its first all-electric car, chief executive Oliver Blume has said.

Porsche aims to keep its profit margin running at a double-digit percentage of sales in the coming years, benefiting from more efficient production while boosting spending on its first all-electric car, chief executive Oliver Blume has said.

The Volkswagen -owned sports car maker is investing about EUR1bn (US$1.1bn) at its headquarters in Zuffenhausen and creating more than 1,000 jobs there to build the battery-powered Mission E model, Reuters reported.

Porsche opened a new plant at its base on Friday to produce eight-cylinder engines for Porsches as well as Bentleys, Audis and Lamborghinis, as VW looks to boost synergies between group brands.

The new facility, where 400 workers will assemble around 200 V8 engines per day, can be expanded to also produce electric engines, Porsche said.

“It’s obvious that Porsche in future wants to remain the world’s most efficient carmaker,” Blume told Reuters. “That (goal) is tied to the return on sales which we set ourselves as the target in the past.”

First-quarter operating profit at Porsche, the second biggest contributor to the VW group profit after Audi, jumped 17% to EUR896m with an operating margin of 16.7%. The manufacturer has a strategic margin target of 15%.

Management expects deliveries this year to beat last year’s record of 225,000 sports cars and sport-utility vehicles (SUV) as the top-selling Macan model is in its second full year of sales with a new four-cylinder variant stoking demand for the compact SUV.

Also helping profitability is an agreement between workers and management to extend weekly hours at Zuffenhausen and drop parts of a pay increase, Reuters noted.

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