German Manager Magazin: Porsche: The car manufacturer lures investors before the IPO with high return targets001925

The sports car builder Porsche has big plans for the coming years ahead of the planned IPO. The management around boss Oliver Blume wants to benefit above all from the increasing number of wealthy people, but also earn money from the move to pure electric cars. In some areas, the company also relies on the Wolfsburg parent company for this Volkswagen separate ways: The software for the company’s own electric cars should initially be created on its own due to delays at the VW software subsidiary Cariad. The VW shares increased significantly at the top of the Dax.

At an investor event on Monday, the high-yield pearl of the car giant VW gave a deeper insight into its own finances and plans for the coming years – above all to convince potential shareholders of the carmaker. The aim of Blume and also of VW boss Herbert Diess is to achieve the highest possible valuation of the company when the shares are listed on the stock exchange in the fourth quarter as planned. Because VW wants to bring in a lot of money through the sale of shares in order to be able to make the necessary investments in its own electrical plans.

Porsche CFO Lutz Meschke promised long-term operating earnings before interest and taxes (EBIT) of 20 percent of sales, last year Porsche achieved 16 percent. Such margins can only be achieved in the upper luxury range with corresponding sales prices. The company from Stuttgart-Zuffenhausen sees itself well positioned in the range of 100,000 euros and more per car.

VW preferred shares gained 4.5 percent in the afternoon, while Mercedes-Benz shares gained 2.5 percent and bmw -Strains climbed 1.6 percent. In the case of the VW umbrella holding company Porsche SE and its preferred stocks, which are also listed in the Dax, the plus amounted to 3.3 percent.

No niche supplier like Ferrari

Blume wants to offer customers luxury, but not become a niche supplier. However, the balancing act between higher sales figures and exclusivity will not be a sure-fire success. “Mass has never been our driving force and will never be,” promised the manager. The manufacturer wants to increase sales noticeably in the medium term, by an annual average of seven to eight percent in the coming years. Porsche is aiming for a margin of between 17 and 19 percent. According to the statements, the management feels comfortable with the current market share.

The basis is a planned growth of up to 18 percent to 38 to 39 billion euros in revenue this year. After 16 percent in the previous year, the operating margin should be between 17 and 18 percent. This could enable Porsche to achieve an operating profit of up to around seven billion euros.

Electric cars with more margin power than combustion engines

A boost in returns should also come from the new electric cars. Meschke sees even more pricing power for Porsche with buyers of electric models than with the group’s combustion engines. After the Macan and the Cayenne, Porsche is planning a third city SUV that will be built in Leipzig. By the end of the decade, eight out of ten Porsches sold will be fully electric.

After many years under the VW group umbrella, Porsche could regain its independence through an IPO. Half of the share capital is to be divided into ordinary shares with voting rights and preference shares without voting rights. VW wants to place up to a quarter of the preferred shares on the stock exchange.

Of the original shares, 25 percent plus one share are to go to the holding company Porsche SE, in which the Porsche and Piëch families have bundled their shares in the VW group and control it with a majority of votes. With this step, the families want to regain direct influence on the car manufacturer with the family name. In Wolfsburg, strong employee representatives and the state of Lower Saxony have a say on the supervisory board.

With its own stock market listing, the value of the sports car manufacturer could become clearer than under the care of the group, analysts believe – and thus also benefit Volkswagen shareholders. The Porsche management did not want to comment on the intended valuation, but estimates on the market assume a total value of the company of 80 to 90 billion euros. However, the market fluctuates due to supply issues and the Ukraine-War is currently strong and could also thwart the plans. With a target free float of 12.5 percent, it could in any case be one of the largest IPOs in recent times Germany will.

More independence from VW

Porsche only wants to compare itself to a limited extent with the Italian luxury sports car manufacturer Ferrari, which is highly rated on the stock exchange. With the all-electric Taycan alone and its around 40,000 vehicles a year, Porsche is around four times the total Ferrari sales, said Blume. While Ferrari is planning up to 40 percent for the margin before interest, taxes, depreciation and amortization (Ebitda) in 2026, Porsche expects this figure to be up to 27 percent in the medium term.

The fact that the carmaker Porsche is currently breaking away from the corporate corset is also reflected in the already trimmed cooperation with the VW software subsidiary Cariad. Their software platform with the designation “2.0” for widespread use in the entire group comes much too late for the Porsche managers in 2026 – because the new all-electric Macan is scheduled to come onto the market in 2024. In this area, Porsche has abandoned the software suite intended for VW matters and is initially relying on the almost finished software platform “1.2”, which is being specially adapted for Porsche.

For software for autonomous driving, Porsche has teamed up with well-known tech companies in the United States and China agreed, said CFO Meschke. He did not want to name specific names yet. There should be news in the coming weeks about the planned further industrial cooperation with the VW Group, as Blume said.

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