Porsche holding company warns of £17bn writedown in Volkswagen stake

Saturday 14 December 2024 1:07 pm

Porsche SE, Volkswagen’s prime shareholder, on Friday warned it could write down the worth of its stake in Europe’s prime carmaker by as much as €20bn (£16.6bn), within the newest signal of how VW’s price disaster has shaken investor religion within the carmaker.

The German carmaker is affected by excessive prices, fierce Asian competitors and a chronic bitter battle with highly effective unions over plant closures and wage cuts.

Porsche SE, which owns 31.9 per cent of Volkswagen’s fairness and 53.3 per cent of its voting rights, mentioned it expects to jot down down the worth of the holding by €7bn to €20bn.

Primarily based on Volkswagen’s present market capitalisation, the stake is price round €14.3bn.

The carmaker, within the midst of tense negotiations with unions over price cuts at its German operations, was unable to finish its monetary planning for the 12 months, forcing Porsche SE to depend on analysts’ expectations for its forecasts.

Porsche SE, the holding agency of the Porsche and Piech households, mentioned it additionally expects an impairment of €1bn to €2bn on its 12.5 per cent stake in luxurious carmaker Porsche AG.

Porsche SE mentioned the impairments had been tough estimates, citing a “market setting with additional growing uncertainties, decrease demand than initially anticipated on numerous markets and growing geopolitical tensions and protectionist tendencies”.

It now expects its group consequence after tax in 2024 to be “considerably destructive”, withdrawing its forecast of €2.4bn to €4.4bn however nonetheless anticipating to distribute a dividend for the monetary 12 months.

Volkswagen’s dividend, one of the crucial essential money sources for Porsche SE, is ready to fall to €6.75 from €9 final 12 months based on LSEG estimates after the carmaker’s earnings within the first 9 months of 2024 had been down by a 3rd from a 12 months in the past.

Unions are pressuring Volkswagen administration to chop its dividend additional to cut back prices, however the CFO mentioned final week the automaker was dedicated to a payout ratio of no less than 30 per cent of earnings after tax.

Analysts have warned the mix of pricing strain, decrease dividends from China joint ventures and dedicated investments will probably go away Volkswagen with a free money movement near zero in coming years, boding badly for Porsche SE’s monetary stability.

Reuters.