Porsche First-Half Profit Soars

Its stake in VW caused the increase as sales were down.

Porsche said on March 31 that its first-half profit leapt fourfold owing to its stake in Volkswagen, but that sales were down and that it could not give a full-year forecast.

Porsche's net profit jumped to to 5.5 billion euros (US$7.3 billion) in the six months from August to January, mainly as a result of a spike in the value of VW shares in October, the company said.

Porsche owns 50% of Volkswagen, the biggest European car maker, and wants to raise that holding to 75%.

In its 2007/2008 fiscal year, Porsche had reported a first half profit of 1.26 billion euros.

Pre-tax profit climbed to 7.34 billion euros from 1.66 billion meanwhile, a result that also stemmed largely from transactions in cash-settled options on VW shares. Cash-settled options are stock option contracts under which settlement is done via the payment of cash equal to the difference between the market value and the contractual value when the option is exercised or expires. Porsche has used such VW-based instruments to make huge profits in the past two years, and they contributed 6.84 billion euros to the group's first half results this time around. But the company warned that because the sum earned depended on the price of VW shares, "the amount could decrease again and could, by the end of the business year, be less than the half-year amount."

Other earnings from VW added 444.4 million euros to Porsche's bottom line, slightly less than during the same period a year earlier.

Sales of Porsche's own cars fell meanwhile by 26.7% to 34,266 vehicles.

The iconic 911 sports car was the group's second best-selling model, at 13,543 units, down from 16,261 a year earlier, while customers bought 16,773 Cayenne sports utility vehicles, compared with 20,638 in the previous year.

For the full year, Porsche said no reliable forecast was possible, with neither Porsche nor VW able to escape the effects of a sector-wide slump, although VW expected to do better than rivals.

The company has rolled over a 10-billion-euro credit line from a consortium of banks, and another 2.5 billion could be added "to support the achievement of strategic goals and also to meet future capital requirements," it said.

Copyright Agence France-Presse, 2009

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