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Business

Porsche expect pre-tax loss of 5 billion euros on VW buy

Text by NEWS WIRES

Latest update : 2009-08-14

Porsche have reported that they expect the merger with Volkswagen to have a negative impact on its pre-tax profits in the 2008-2009 fiscal year. The German sports car manufacturer forecast a loss of up to 5 billion euros.

AFP - The German sports car maker Porsche expects to post a pre-tax loss of at most five billion euros (seven billion dollars) in its 2008-2009 fiscal year as part of its merger with Volkswagen, statements issued by Porsche said on Wednesday.
  
Porsche is in "advanced talks" to sell VW stock options to "one or several investors" according to a statement sent to stock market authorities while the company's supervisory board met.
  
Among the investors was the Qatar LLC holding company, Porsche said in a separate statement.
  
The company is also in talks with the Gulf emirate over selling a stake in Porsche.
  
The sale of options for around 20 percent of the shares in VW, the biggest European carmaker, would result in a large writedown on Porsche's books, the car maker said.
  
But it will also improve the heaveily indebted company's cash position, it added.
  
Porsche had acquired the shares as it sought to take over the much bigger VW, but the operation failed and VW got the upper hand in the end and is now to merge with Porsche.
  
Qatar is to take a stake of between 17 and 19 percent in the integrated group, with the Porsche and Piech families holding 51 percent and the German state of Lower Saxony owning 20 percent.
  
Details are to be released following a scheduled meeting of the VW supervisory board on August 13.
  
Porsche's books will also take a hit from the full consolidation of VW's results, which became obligatory after Porsche acquired 51 percent of VW in January, a statement said.
  
Porsche is to release in October the results of its fiscal year that ends on July 31.
  
During the 2007-2008 fiscal year, its net profit reached a record 6.4 billion euros, mainly owing to financial mechanisms set up to buy VW.
  
On Wednesday, Porsche shares bounced back in late trading after initially being hit by the news, and showed a gain of 0.80 percent at 44.20 euros in over-the-counter trading.
  
VW shares fell 3.45 percent to 246.50 euros, while the DAX index on which they were listed was 2.13 percent higher overall.

Date created : 2009-07-29

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