Porsche reports 24% increase in 2nd half profits

[Chris79SC]

This came across my bloomberg this morning.
Seems like the Cayenne strategy is working...


Porsche Fiscal 2nd-Half Profit Rises 24% on Cayenne (Update2)

(Adds analyst comment in fourth paragraph.)

Nov. 12 (Bloomberg) -- Porsche AG, the European carmaker with
the highest profit margins, increased fiscal second-half net income
24 percent on demand for the Cayenne sport-utility vehicle, giving
it a seventh straight year of record earnings.
Net income in the six months ended July 31 rose to 463 million
euros ($538 million) from 372.6 million euros, Stuttgart, Germany-
based Porsche said in a statement to the Frankfurt stock exchange.
Pretax profit rose 11 percent to 747 million euros.
Porsche began selling the Cayenne, which costs 47,600 euros to
100,000 euros, a year ago. The model has compensated for a 15
percent decline in sales of the 911 and Boxster sports cars.
Porsche sold 20,603 SUVs in the fiscal year ended July 31. The
waiting list for the vehicle is between six months and a year.
``With the Cayenne, Porsche has compensated for weakness in
its sports cars, and when the Cayenne has been around for a full
year, the company will have new sports cars,'' said Henrik Lier, an
analyst at WestLB, who rates the company ``neutral.'' ``They've
planned well.''
The vehicle competes against DaimlerChrysler AG's Mercedes M-
Class and Bayerische Motoren Werke AG's X5, as well as Ford Motor
Co.'s Land Rover. General Motors Corp. makes the Cadillac Escalade
SUV and Toyota Motor Co. manufacturers the Lexus LX 470. The
company expects to sell at least 25,000 Cayennes annually.
For the full year, pretax profit rose 12.6 percent to 933
million euros. Net income rose 22.3 percent to 565 million euros.
Analysts surveyed by Bloomberg News had predicted 949 million euros
in pretax profit and 561 million euros in net income.

Share Price

Porsche shares fell 7.34 euros, or 1.7 percent, to 434 euros,
giving the company a market value of 7.6 billion euros. The stock
is up 9.6 percent so far this year.
``Some investors were expecting pretax profit of more than a
billion euros for the full year and that's hurt the shares,'' said
Georg Stuerzer, an analyst at HVB Group, who rates the company
``buy.'' ``But the company is fundamentally sound.''
Porsche has a net profit margin of 10 percent on sales, double
the 5 percent profit margin of Bayerische Motoren Werke AG, the
world's second-largest maker of luxury cars.
Chief Executive Wendelin Wiedeking, 51, wanted to increase
sales and introduce a third model to offset the impact of the aging
sports-car models and falling demand. He opted to develop a sport-
utility vehicle because many Porsche drivers already owned one
built by competitors.

Cayenne Models

There are three versions of the SUV, which are called the
Cayenne, the Cayenne S and the Cayenne Turbo. The power of the
engines ranges from 247 horsepower to 450 horsepower. The Turbo
version can accelerate from 0 to 100 kilometers (62 miles) an hour
in 5.6 seconds. Unlike the company's sports cars, the Cayenne can
seat a family and carry gear.
Porsche's investments in the Cayenne included a new factory in
Leipzig in eastern Germany. The plant, built alongside a racetrack,
employs just 300 workers.
The company reduced costs by developing the Cayenne with
Volkswagen AG, Europe's largest carmaker. Volkswagen builds the
basic frame for the Cayenne and its own Touareg sport-utility
vehicle in Bratislava, Slovakia.
Porsche will increase its cooperation with Volkswagen. The
company will begin selling a six-cylinder version of the Cayenne in
Europe this month with a motor made by Volkswagen. This will be the
first time since the 1980s that Porsche has used an engine that it
didn't develop itself. The basic motor is the same as used in the
Touareg.
The six-cylinder Cayenne will have a starting price of 47,592
euros in Germany.
Porsche is proposing to increase its dividends about 14
percent to 3.34 euros for each common share and 3.4 euros per
preferred share.

[johncj8989]

Maybe they should take some of that profit and roll it into delivering a real 911 to the public. I have no problem with their current strategy if it's making them money as long as they dont forget their roots.

[TomTurtle]

Boy, I sure am glad I bought that one share of Porsche AG last year (thats all I could afford at $422/sh.)!

[ChrisBennet]

"Porsche sold 20,603 SUVs in the fiscal year ended July 31. The
waiting list for the vehicle is between six months and a year."

I don't think there is waiting list here in the US now.
-Chris

[Mike Feinstein]

Profits are up thanks to SUV sales while sports car sales decline. Still no investment in a racing program. Makes you want to grab these clowns by the lapels and shake them good and hard. Porsche management just can't seem to see the forest through the trees.

[tchanson]

Originally posted by ChrisBennet
"The waiting list for the vehicle is between six months and a year."

I don't think there is waiting list here in the US now.
-Chris

Me either. I was at a club function at a local dealer last weekend and counted 24 (!) spankin' new PepperTrucks on the lot.

I'll be interested to see what the truck sales are like a year from now when (1) the early adopters have come and gone and (2) the Senate Finance committee (which has already made the proposal, I believe) drastically reduces the tax incentives that have, IMO, artificially (and unintentionally) goosed the sales of trucks like these in the US.

Oh wait...I forgot they plan to make up the volume next year by moving downmarket with the Volkswagen V6 powered version...

Tim

[stone43]

Well, those Pepper Trucks are very popular here in Southern Cal. I have even seen a few of the Turbos (add $35K to the price of a standard S) buzzing around town, decked out with some Chrome 20's and they are faster than hell! Got my ass handed to me by one a few weeks ago.

Maybe Porsche should invest in an SUV racing program, whereas they would surely dominate!

[Mike Feinstein]

And maybe they could come out with a 420 hp minivan too. It would dominate the minivan racing circuit.

[DanTheCat]

And maybe they could come out with a 420 hp minivan too. It would dominate the minivan racing circuit.

Hahahahaha!!!!!!

Damn that's funny.

Dan

[Adam]

Porsche are friggin' crazy if they don't enter a few Peppertrucks in the Paris-Dakar soon! They can contest the 24-hr minivan enduro next year.

[ChrisBennet]

Perhaps Porsche has decided that racing as a company is not profitable.
Perhaps they just can't afford to compete at the highest levels and have too much to lose if they aren't sure they can win.
I miss the days when Porsche raced but lets face it, they almost went out of business. Like them or not, the bean counters have saved the marque. As long as the company is still around there is still hope.
-Chris

[geof33]

While I agree, Porsche has somewhat lost it's "roots", the reality is they are still the only and LAST privately owned sports car maker in the world. No big daddy watching over them. Given this fact, I say drive on!!! I love my car and will always love it. As long as parts don't fall off the availabilty table, I'm happy. The new GT is a really cool car. Porsche WILL be back in racing when the FIA pulls their collective heads out of their A$$!!!

Cayanne in the Dakar? Sweet. Do it up!!

[911gilley]

Has anyone seen the new GT? I don't think porsche has forgotten its roots there. That thing is one serious piece of engineering. And from engineering vehicles like the GT, we see improvements in their "mass" production line vehicles...from the Carerra's to the --- yes Cayenne's and hence a better bottom line.