Porsche increases dividend on posting €5.85bn pre-tax profit
Author: Robin Brown
Published: 13 November 2007
Porsche is to substantially increase its shareholder dividend after posting annual pre-tax profits of €5.85bn (£4.1bn).
The figure more than doubles last year´s profits of €2.11bn (£1.5bn) and will lead to a dividend of €6.94 (£4.89) per common share
Strong demand for Porsche models and a healthy performance from Volkswagen, in which Porsche holds a 31% stake, have driven the profits. Porsche received €702.4m (£495m) from its stake in VW this year.
But Porsche also revealed that €3.6bn (£2.5bn) of the €5.86bn profit in the year to July was from share options, meaning it made just €1.05bn (£700m) from making cars, attracting criticism that it is behaving like a hedge fund.
Porsche is widely expected to increase its stake in VW in January 2008 to give it overall control of the German manufacturer which owns Audi, Bentley, Bugatti, Lamborghini, SEAT and Skoda. Porsche currently says it plans to increase its stake in VW to 31% only.
The European Court of Justice recently ruled that the so-called "Volkswagen Law" that protects VW from takeovers was illegal, paving the way for a Porsche takeover.
The waters are muddied by Audi, which is increasingly manoevring to take on Porsche as a competitor in the sports car arena, and the prospect of strict EU targets on carbon emissions by 2015.
Taking over Volkswagen will allow Porsche to bring down its average emissions by off-setting high levels of CO2 from Porsche vehicles with low-CO2 models from VW, SEAT and Skoda.
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