Porsche SE is headed for a second consecutive annual loss in the billions of euros, as the hangover lingers from ex-Chief Executive Wendelin Wiedeking's failed takeover of Volkswagen AG.
The indebted automotive holding company created as a vehicle for the acquisition will stay deeply in the red as it is forced to deconsolidate its Volkswagen stake and much of its Porsche AG sports car business, officials said on Wednesday.
The complex untangling at Porsche - now set to merge in 2011 with its 51%-owned Volkswagen unit - cemented its reputation as a financial black box that scarcely resembles its roots as a maker of sports cars such as the 911 Turbo.
As its debt mounted just as car markets collapsed, Porsche was forced to drop its takeover and agree a merger with Volkswagen. The first step is selling to VW a 49.9% stake in the Porsche AG sports car business by the end of this year.
“To take into account the rather unlikely possibility that the merger does not take place after all, the parties concerned have incorporated a put/call structure into the transaction concept,” said Hans Dieter Poetsch, finance chief of both Porsche SE and Volkswagen.
This includes transferring the remaining 50.1% of Porsche AG to Volkswagen by no later than 2014, he added.
Poetsch warned on Wednesday that the deconsolidation loss in the fiscal year to July would be triggered if VW's home state of Lower Saxony once again gets the right to appoint two members to VW's supervisory board at the next annual meeting.
According to International Financial Reporting Standards, this would mean Porsche would have to book its VW stake at market value, he told Porsche's annual news conference.
“This would give rise to a considerable loss based on the current market price,” Poetsch said.
Including the sale of the minority stake in the sports car business, the structural changes in its consolidated statements would lead to a loss “in the low single-digit billion euro range.”
Porsche SE posted a group net loss of about €3.6 billion ($5.37 billion) for the fiscal 2008/09 year. Net debt at the end of its fiscal year on July 31 was €11.4 billion. (Reuters)