The Porsche Holding SE (PSE) expects a loss of billions for 2024. “The consolidated result after taxes of the Porsche SE Group for the 2024 financial year will be significantly negative,” said the major shareholder Volkswagen and Porsche on Friday after the stock market closed. The forecast for consolidated earnings after taxes of between 2.4 billion euros and 4.4 billion euros will be withdrawn.
The background is a billion-dollar write-down on Porsche SE’s most important investments. The holding company, controlled by the Porsche and Piëch families, holds 53.3 percent of the voting rights in Volkswagen AG and 25 percent of the ordinary shares in Porsche AG. It is currently assumed that the group book value of the Volkswagen share will have to be reduced by between 7 and 20 billion euros, the group announced on Friday evening. The book value of the Porsche package is expected to be reduced by between one and two billion euros. However, even after the depreciation, the valuation will be “significantly above the pro rata market values”.
At the end of the third quarter, Porsche SE valued its investments in Volkswagen at 51.5 billion euros and in Porsche AG at 10.5 billion euros. This puts the value of a Volkswagen ordinary share at more than 300 euros. The shares are currently trading at 91 euros on the stock exchange. With the stated maximum depreciation of 20 billion euros, one Volkswagen ordinary share would be valued at around 200 euros.
Porsche SE justified the write-off by saying that the Volkswagen Group had informed it that the current planning rounds at Volkswagen and Porsche were no longer expected to be approved by the end of the year. The company can therefore currently not rely on the results of a plan approved by the two car manufacturers.
Instead, external analyst expectations were primarily used for the impairment tests for the two investments as of December 31st. On this basis, the unscheduled value adjustments are assumed. The company left its net debt forecast unchanged at 5 to 5.5 billion euros.
At Volkswagen, the board of directors and employees have been arguing for three months over the details of a billion-dollar savings program. The board has terminated the collective agreements and is threatening to close plants; negotiations are dragging on; and it is also about medium-term planning for future plant occupancy. Porsche AG is also affected by this planning uncertainty; it builds some of its models in Volkswagen factories. The Porsche representatives on the supervisory board take a hard line towards the employees, However, they see their hope of the closure of large plants dwindling
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Porsche SE added in its profit warning that it continues to assume that it will pay a dividend for 2024. The “expected unplanned earnings effects” would not have an impact on cash and would not affect the forecasts of Volkswagen and Porsche AG for 2024.