Porsche's Consolidated Q1 Results Post EUR327-Mil. Profit After Tax

The Porsche SE holding company has posted a strong profit after tax following the first quarter of 2012 of EUR327 million (USD425.7 million), according to a company press release. The strong performance posted by the holding structure was mainly as a result of the company's holdings in the Volkswagen group and Porsche Zwischenholding GmbH group, the entity that controls Porsche's car-making business. The release stated that the profits from investments amounted to EUR1.169 billion for the January to March period. This was countered, however, by the non-cash special effect that occurred as a result of the adjustment in valuation of the put and call options for the shares the company still holds in Porsche Zwischenholding GmbH, with the value of these options being downgraded by EUR810 million. The interaction of the dividend from shareholdings and the downgrading of the put/call options in Porsche Zwischenholding GmbH affected the overall profit-after-tax figure.

Since the end of last year Porsche SE's net liquidity increased nominally by EUR14 million to EUR1,508 million. At the end of the first quarter, Porsche SE received a net dividend from the VW Group of EUR331 million. As was reported initially last week, Porsche Zwischenholding GmbH group increased its unit sales by 29.0% to 30,231 vehicles and its sales revenue by 32.4% to EUR3.025 billion (see Germany: 4 May 2012: Porsche's Sales Rise 29% in Q1). The operating result increased by 18.4% to EUR528 million. Also, as previously reported, the VW Group's overall global sales increased by 11.3% year-on-year (y/y) to 2,259,542 units in the first quarter. Sales revenue rose by an accelerated 26.3% y/y to EUR47.326 billion, while the company's operating profit rose 10.2% y/y to EUR3.209 billion (see Germany: 27 April 2012: VW Group's Net Profits Up 86% in Q1 on All Brands Apart from SEAT).

Outlook and Implications

The results of the Porsche holding company are obviously mainly governed by the fortunes of the Porsche carmaking unit, Porsche AG, which in turn is controlled by Porsche Zwischenholding GmbH. Porsche SE has a 50.7% shareholding in Volkswagen AG and a 50.1% holding in Zwischenholding GmbH. In the results release, Porsche SE again restated that it continues to look for a solution that will see the companies create an integrated car-making group allowing VW to take ultimate control of Porsche SE's assets, instead of the notional control it currently has over the company. As things stand the VW Group has held off taking full control of Porsche SE as a result of the potential liabilities that may result from outstanding legal cases regarding what the plaintiffs see as market manipulation by Porsche's previous management regime during the failed takeover of VW. As we have seen, the holding company continues to perform very positively as a result of its holding in VW Group and Porsche Zwischenholding GmbH, as a result of the extremely strong ongoing sales development for both companies, with particular reference to the ongoing positive demand in the United States and China. As long as VW and Porsche's carmaking operations continue to perform well and generate growth, Porsche SE can expect to continue to post positive financial results. An integrated car company incorporating Porsche with VW would lead to a simplified legal entity and cut down on management workload, as well as ultimately allowing VW to book Porsche SE's sales and profits as its own. For VW this remains a desirable goal that it continues to work towards.