Porsche Slows VW Takeover; sales 18% vs. last year
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STUTTGART, Germany -- Porsche Automobil Holding SE said Wednesday that the financial crisis has made it increasingly unlikely it will raise its stake in Volkswagen AG above 50% before year-end.
The sports-car maker also said that sales in the first four months of its fiscal year, which began Aug. 1, were down 18% as demand for luxury cars weakened amid the financial crisis.
"Our goal still is to initially increase our stake in VW as soon as possible to over 50%," Porsche Chief Executive Wendelin Wiedeking said at the company's annual earnings news conference. "In light of the current economic environment, however, it's becoming increasingly more unlikely that we will achieve this goal" this year.
Porsche said last month it directly controlled 42.6% of VW shares and held options tied to an additional 31.5% of the stock. The company also said at the time it intends to raise its stake eventually to 75%, seeking a so-called domination agreement to take full control of Europe's biggest auto maker by volume.
But Porsche Chief Financial Officer Holger Haerter said Wednesday the company isn't willing to acquire VW common shares at "economically absurd prices."
Buying VW shares at the current price level of about €260 ($340) a share would result in considerable write-down risks and unforeseeable earnings burdens, Mr. Haerter said.
Last month's announcement that Porsche was seeking to raise its VW stake caused VW shares to soar to record levels. The stock traded above €1,000 a share, briefly making VW the world's biggest company by market capitalization, as hedge funds that had bet on a fall scrambled to cover short positions.
With the German state of Lower Saxony still controlling slightly more than 20% of VW's voting rights, there were very few shares in free-float for funds to buy to cover their positions.
Mr. Haerter said a reasonable price level for Volkswagen shares would be below €200 a share.
VW shares were up €8.47, or 3.3%, at €263.47 in a broadly weaker Frankfurt market Wednesday.
Porsche said the automotive-industry downturn is hitting its business. In the four months from August to November, Porsche sold 25,200 vehicles, down 18% from the year-earlier period. Revenue during the four months fell 15% to slightly more than €2 billion, according to preliminary figures.
The sports-car maker previously warned it doesn't expect car sales in the current fiscal year to reach the 98,652 vehicles sold last year because of the market downturn.
Like other car makers, Porsche is reacting to falling demand by cutting production. Production at its main plant in Zuffenhausen, near Stuttgart, was halted Friday and the company said it plans to halt output at the plant for an additional seven days between now and the end of January.
Porsche has so far declined to provide an earnings forecast for the current fiscal year, citing the lack of visibility in the current economic environment. The company earlier this month reported a sharp increase in full-year earnings, boosted by gains related to its stake in Volkswagen.
Mr. Wiedeking said Porsche is the world's most profitable car maker, adding that the company's core operations are posting a double-digit-percentage return on sales. He didn't elaborate.
The auto maker disclosed its six executive-board members received remuneration totaling €143.5 million in the fiscal year ended July 31, up from €112.7 million the previous year. Porsche's executive board remuneration consists of a basic salary and a profit-based variable component, which amounted to €139.5 million for fiscal 2008.
The sports-car maker also said that sales in the first four months of its fiscal year, which began Aug. 1, were down 18% as demand for luxury cars weakened amid the financial crisis.
"Our goal still is to initially increase our stake in VW as soon as possible to over 50%," Porsche Chief Executive Wendelin Wiedeking said at the company's annual earnings news conference. "In light of the current economic environment, however, it's becoming increasingly more unlikely that we will achieve this goal" this year.
Porsche said last month it directly controlled 42.6% of VW shares and held options tied to an additional 31.5% of the stock. The company also said at the time it intends to raise its stake eventually to 75%, seeking a so-called domination agreement to take full control of Europe's biggest auto maker by volume.
But Porsche Chief Financial Officer Holger Haerter said Wednesday the company isn't willing to acquire VW common shares at "economically absurd prices."
Buying VW shares at the current price level of about €260 ($340) a share would result in considerable write-down risks and unforeseeable earnings burdens, Mr. Haerter said.
Last month's announcement that Porsche was seeking to raise its VW stake caused VW shares to soar to record levels. The stock traded above €1,000 a share, briefly making VW the world's biggest company by market capitalization, as hedge funds that had bet on a fall scrambled to cover short positions.
With the German state of Lower Saxony still controlling slightly more than 20% of VW's voting rights, there were very few shares in free-float for funds to buy to cover their positions.
Mr. Haerter said a reasonable price level for Volkswagen shares would be below €200 a share.
VW shares were up €8.47, or 3.3%, at €263.47 in a broadly weaker Frankfurt market Wednesday.
Porsche said the automotive-industry downturn is hitting its business. In the four months from August to November, Porsche sold 25,200 vehicles, down 18% from the year-earlier period. Revenue during the four months fell 15% to slightly more than €2 billion, according to preliminary figures.
The sports-car maker previously warned it doesn't expect car sales in the current fiscal year to reach the 98,652 vehicles sold last year because of the market downturn.
Like other car makers, Porsche is reacting to falling demand by cutting production. Production at its main plant in Zuffenhausen, near Stuttgart, was halted Friday and the company said it plans to halt output at the plant for an additional seven days between now and the end of January.
Porsche has so far declined to provide an earnings forecast for the current fiscal year, citing the lack of visibility in the current economic environment. The company earlier this month reported a sharp increase in full-year earnings, boosted by gains related to its stake in Volkswagen.
Mr. Wiedeking said Porsche is the world's most profitable car maker, adding that the company's core operations are posting a double-digit-percentage return on sales. He didn't elaborate.
The auto maker disclosed its six executive-board members received remuneration totaling €143.5 million in the fiscal year ended July 31, up from €112.7 million the previous year. Porsche's executive board remuneration consists of a basic salary and a profit-based variable component, which amounted to €139.5 million for fiscal 2008.