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- Record earnings at VW and Porsche SE – car business
First-quarter net income was 691 million euros ($1.03 billion), the Stuttgart, Germany-based company said in a statement. Porsche, which reported quarterly earnings for the first time today, did not provide a comparison figure.
VW, Europe’s biggest automaker, posted record earnings before interest and tax of 2.91 billion euros on April 27. Porsche’s carmaking division said this week operating profit more than doubled to 496 million euros. Porsche said it expects to generate a profit this year before potential changes to the value of options on the Porsche car business.
The company, which is controlled by the Porsche and Piech families, agreed to combine with VW in August 2009 following a failed attempt by the sports-car maker to acquire its larger rival. The merger may be delayed until next year because of German investigations into allegations of Porsche share-price manipulation and U.S. lawsuits.
Porsche raised 4.9 billion euros in a rights offering earlier this month. Proceeds from the share sale decreased net debt to 1.8 billion from 6.7 billion euros. A further reduction will take place after VW’s planned dividend payout of 2.20 euros a share next month, Porsche said.
The two companies agreed to merge after Porsche racked up more than 10 billion euros in debt in its failed effort to gain control of VW.
Porsche preferred shares rose as much as 56 cents, or 1.2 percent, to 49.20 euros and was up 0.4 percent to 48.83 euros as of 4:28 p.m. in Frankfurt trading. The stock has dropped 4.2 percent this year, valuing the company at 15 billion euros.
VW is satisfied with the progress of integration and still sees a 50 percent chance that shareholders approve the deal this year, Hans Dieter Poetsch, chief financial officer at both VW and Porsche, said earlier this week. VW took a 400 million-euro charge last quarter on the value of an option to buy the rest of Porsche’s sports-car business. VW owns 49.9 percent of the unit.
VW, based in Wolfsburg, Germany, more than tripled first- quarter net income to 1.6 billion euros, led by demand for Audi’s revamped A8 sedan and new A7 Sportback as well as VW’s Tiguan compact sport-utility vehicle.
VW expects rising demand in China to help boost revenue and earnings before interest and taxes this year. Its Chinese joint ventures contributed 557 million euros to first-quarter earnings. The Porsche car-making business more than doubled Ebit after a revamp of the Cayenne SUV led to a 62 percent gain in deliveries of its best-selling model.
Luxury-car makers, including Bayerische Motoren Werke AG and Daimler AG’s Mercedes-Benz, are anticipating record demand this year, boosted by growing wealth in China and rebounding spending in the U.S. Porsche aims to double global sales to about 200,000 cars by 2018 by adding models such as a compact SUV and increasing sales in emerging markets.
Investors claim Porsche misled them by denying through much of 2008 that it intended to acquire VW. Porsche said in October of that year it controlled most of VW’s common stock, causing the shares to surge as short-sellers raced to cover their positions. Porsche has denied the charges.