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Porsche returns to profit, cautiously upbeat on VW merger

FRANKFURT, August 2011 (AFP) – German luxury car group Porsche posted Tuesday a first-half net profit of 149 million euros ($212 million), bouncing back from a heavy loss as it slashed massive debt with a capital increase.

In the first half of 2010, Porsche SE, the group that controls Porsche AG, the maker of the iconic 911 sports car, suffered a net loss of 1.62 billion euros.

This time around, the six-month result of Porsche SE, which also owns a 50.7 percent in Volkswagen AG, was affected by two main factors.

The holding company benefitted from strong operating results by the two car makers but suffered losses on complex holdings of VW stock options.

Meanwhile, Porsche said it had slashed its debt to 1.5 billion euros from more than six billion euros at the start of the year thanks to a capital increase worth 4.9 billion euros that was finalized in April.

A Porsche statement said it sees a 50-50 chance that an extraordinary meeting of shareholders this year would approve a long-awaited merger with VW.

Meetings of both Porsche and VW shareholders are scheduled in December.

A deal would see Porsche become VW’s 10th brand but it has been held up by German investigations of two former Porsche executives suspected of stock price manipulation and by complaints filed against Porsche in the United States.

Porsche said it “is preparing everything required for the intended merger with Volkswagen,” Europe’s biggest automaker.

But it cautioned that “there is still uncertainty with regard to the tax framework for the merger.”

In addition, the effects that several lawsuits against Porsche SE might have on the deal “cannot be conclusively assessed at the current point in time,” the holding company said.

The executive board felt the “the overall probability of the merger decreases in case of substantial delays in the merger process,” but concluded that it still believed “the merger can be achieved even after 2011.” ■

 

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