Porsche CFO sees higher auto margins in 2005/06

<div class="artTitle">INTERVIEW-Porsche CFO sees higher auto margins in 2005/06</div> <div class="newsDate">Wednesday 7 December 2005, 7:05am EST</div> <div class="newsDate"> <table id="StoryTable" cellspacing="0" cellpadding="0" width="158" align="left" border="0"> <tbody> <tr> <td valign="top"> </td> <td valign="top" width="8"> </td> </tr> </tbody> </table> STUTTGART, Germany, Dec 7 (Reuters) - Porsche (PSHG_p.DE: Quote , Profile , Research ) expects the roll-out of new models like the Cayman S and higher end 911 derivatives such as the all-wheel drive Carrera 4 to boost margins in the auto business in fiscal year to end July. 'We expect a better model mix and that should lead to higher margins in the auto business this year,' finance chief Holger Haerter told Reuters in an interview after the company's annual earnings press conference on Wednesday. Overall earnings would be 'very, very good' this year, he continued, but declined to say whether Porsche would be able to match its pretax profit margin of 18.8 percent from fiscal 2004/05 in the current year due to what the company described as 'enormous' development costs over the next few years. Haerter added that he was optimistic that Porsche would 'not have to wait too long' to achieve at least 100 million euros ($117.9 million) in annual synergies from its cooperation with Volkswagen (VOWG.DE: Quote , Profile , Research ), in which Porsche holds an 18.5 percent stake. Porsche continues to expect it can sustain a return on capital employed (ROCE) of over 20 percent for the mid-term. Although the sportscar maker recently sold its car roof unit CTS to Magna International (MGsva.TO: Quote , Profile , Research ), Haerter said the company had no plans to sell its 25 percent stake in automotive engineering firm Bertrandt (BDTG.DE: Quote , Profile , Research ). </div>

<table cellspacing="0" cellpadding="0" width="550" align="center" border="0"> <tbody> <tr> <td class="defaultbold"> GERMANY: Porsche shares fall on Panamera costs warning </td> </tr> </tbody> </table> <table cellspacing="0" cellpadding="0" width="550" align="center" border="0"> <tbody> <tr> <td colspan="2">07 Dec 2005</td> </tr> <tr> <td valign="top"> Bloomberg reports that Porsche AG shares declined by 4.5% this morning on warnings that the company faces high product development costs that will dent profits. The carmaker, widely admired as the industry’s most profitable, warned that development costs for the new Panamera car and a hybrid engine for the Cayenne sport-utility will be a burden for profit. ``It is clear that starting in this year of business we will be incurring enormous development expenditure on the Panamera project and the hybrid drive in the Cayenne,'' Chief Executive Officer Wendelin Wiedeking said at a press conference today in Stuttgart, according to Bloomberg. Inflation, higher oil prices and ‘not exactly thrilling’ economic growth are additional burdens on growth, Wiedeking added. The shares fell as much as 29.26 euros, or 4.5%, to EUR 625.74 and were down 3.8% at 10:55 a.m. in Frankfurt, Bloomberg said. The stock, which fell 12% on September 26 following the announcement to purchase the Volkswagen stake, has gained 34% so far this year. Porsche expects vehicle sales and revenue to grow in the current year after the company introduced new versions of the Boxster and 911 models last year as well as an its Boxster-derived Cayman this year. Four-month revenue rose 6.7% to EUR2.02 billion, while vehicle sales increased 8.5% to 25,635 units. </td> </tr> </tbody> </table> Edited by - mpollard on 12/07/2005 11:49:57 AM

Grrr.... seems like we Cayman early-adopters are funding the Panamera's development costs then! Wish they'd hurry up and 'develop' a few more horses in the Cayman engine too...

It wouldn't surprise me to see Porsche throw some good stuff on the Cayman in coming years to keep the annual sales rate high. Because they have committed to the Panamera they will need the cash flow. Most other auto manufacturers have already succumbed to buyer demand for horse power, bigger wheels, and flashy interiors and exterior modifications, in order to keep older models attractive.

Heard of it, but never actually thought of this- a Hybrid Porsche (Cayenne). I wonder what it will be like? The base engine bolted to a 200+hp electrical motor for a combined 447+ hp, with the fuel economy of a base Cayenne. Maybe Porsche might take this route, like Lexus now, with their high-performance hybrids.