Porsche's profit soars on VW stake

By: AP
By: AP

FRANKFURT, Germany (AP) -- Luxury car maker Porsche SE said Friday its profits soared by 52 percent in its latest fiscal year - driven higher by gains in its stake in Volkswagen AG, Europe's biggest automaker.

The Stuttgart-based maker of the 911 sports car and the Cayenne sport utility vehicle reported a net profit of nearly 6.4 billion euros ($8.2 billion) for the year that ended July 31. That compared to the 4.2 billion euros it earned in the 2006-2007 year. The company does not release quarterly results.

Porsche shares rose 8.2 percent to close at 68.17 euros ($86.96) in Frankfurt.

Despite the large gain, the company said results were weighed down by development costs related to its upcoming Panamera line, along with work on a hybrid drive for the Cayenne and more fuel-efficient engines.

Its pretax profit for the 2007-2008 year was nearly 8.6 billion euros ($11 billion) - a 46 percent gain from the previous year's 5.8 billion euros.

The company said that the "above-average jump in profit was again due to special influences in connection with the holdings in Volkswagen AG."

Porsche said its stake in VW added some 6.8 billion euros ($8.7 billion) to its pretax profit - compared with 3.6 billion euros a year earlier.

At the end of the fiscal year, Porsche held 22.3 percent of all VW shares. Since then, Porsche has lifted its stake in the Wolfsburg-based company to just shy of 43 percent.

Late last month, it announced it had taken options for another 31.5 percent - causing VW shares to rocket to as much as 1,005 euros ($1,292) and leaving short-sellers grasping at straws as they tried to close their positions.

On Friday, Volkswagen shares edged up to 398.21 euros ($507.64), a 0.4 percent gain on the day.

Porsche has said it intends to raise its VW stake to as much as 75 percent, giving it effective control of the automaker whose brands include VW, Seat, Skoda, Bentley, Audi, Lamborghini and Bugatti.

Looking ahead, the company said it was in a good position but warned that it was "very difficult to make reliable statements on the course of the current business year as a whole because of the current economic situation, which is extremely tense due to the U.S. mortgage crisis and the financial market crisis."

It said Porsche would act cautiously and "if necessary, respond flexibly to any further economic upheavals."

Porsche has already reported that its sales for the 2007-2008 fiscal year rose by 1.3 percent, powered by strong demand for the Cayenne SUV, to 7.5 billion euros ($9.6 billion).

Unit sales increased by a similar amount - 1.2 percent - to 98,652 vehicles.

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