Porsche’s debt pile shrank ahead of 2011 cap hike

Article by Christian Andrei, on August 29, 2010

Porsche Automobil Holding SE's debts may have decreased but it still hasn't gotten to a point where it'd ensured that next year's 5 billion euro ($6.8 billion) capital increase would leave it free of debt and poised to merge with Volkswagen AG. At the end of Porsche's fiscal first half on Jan. 31, its net financial liabilities dropped to 6.1 billion euros.

At the end of November, liabilities of about 11.4 billion euros were recorded at the end of November due partly to a 3.9 billion euro disposal gain used to pay down debt. In its half-year report, Porsche said that the capital increase at Porsche SE is scheduled for the first half of 2011.

For this period, operating profit at its sports car unit, Porsche AG reached 329 million euros in the first half of the year, giving it a return on sales of about 10.4%.

Porsche AG revealed that it expects to keep a double-digit operating margin and increase its volumes slightly in the fiscal year that ends July 31.

First-half profit after tax at parent Porsche SE plunged 84% after accounting rules meant that the group had to revalue its stake in Volkswagen ordinaries as part of deconsolidating the carmaker from its books.

Last year, Porsche SE almost broke down after its balance sheet had recorded billions in debt accumulated in its attempted takeover of VW. It'd now a fact that instead, Porsche was forced to accept that VW will take over Porsche as part of a 16 billion euro asset deal.

The Porsche and Piech families, who control 90% of the votes in Porsche SE, have said that they seek to sell both the sports car unit and independently held Porsche Holding, Europe's largest dealership group.

Topics: porsche, germany

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