Porsche profit rises 25pc to record as Ma­can SUV lifts sales

The Pak Banker - - COMPANIES/BOSS -

BER­LIN: Porsche, the maker of the 911 sports car, re­ported that profit last year jumped 25 per­cent to a record, pro­vid­ing much-needed sup­port to par­ent Volk­swa­gen AG as it braces for the tow­er­ing cost of re­solv­ing its emis­sion­scheat­ing scan­dal. Op­er­at­ing profit in­creased to 3.4 bil­lion euros ($3.78 bil­lion), and rev­enue im­proved 25 per­cent to 21.5 bil­lion euros, the Stuttgart, Ger­many-based sports-car maker said Fri­day in a state­ment.

Fol­low­ing a boost last year stem­ming from the roll­out of the new Ma­can compact sport util­ity ve­hi­cle, de­liv­ery growth is set to slow this year. Porsche also faces sub­stan­tial ex­penses for de­vel­op­ing its first fully-elec­tric model and ex­pand­ing its man­u­fac­tur­ing net­work. Even so, a re­vamp of the brand's 911 sports-car range and ro­bust de­mand for its SUVs should help Porsche meet its 15 per­cent op­er­at­ing profit mar­gin tar­get in 2016 af­ter 16 per­cent last year, it said.

"Porsche con­tin­ues to be on suc­cess course in the cur­rent year as well," Chief Ex­ec­u­tive Of­fi­cer Oliver Blume said in the state­ment. Sales in the first two months grew 14 per­cent to more than 35,000 cars even as de­mand for cars in China, Porsche's largest mar­ket last year, has been cool­ing.

Af­ter the up­scale Audi brand, Porsche is the sec­ond­largest earn­ings con­trib­u­tor at Volk­swa­gen and gen­er­ates the group's high­est mar­gins. The mar­que's suc­cess is vi­tal for Europe's largest au­tomaker to weather what will be bil­lions of euros in costs stem­ming from the emis­sions-test rig­ging.

Porsche's ex­po­sure to the scan­dal is rel­a­tively small. The divi­sion is re­call­ing 13,000 Cayenne SUVs in the U.S. as they use a diesel en­gine de­vel­oped by Audi that in­cludes the soft­ware at the cen­ter of the emis­sions ma­nip­u­la­tion. Porsche is wait­ing for U.S. au­thor­i­ties to ap­prove a fix pro­posal sub­mit­ted by the man­u­fac­turer. Pro­vi­sions for re­lated costs were built last year, Chief Fi­nan­cial Of­fi­cer Lutz Meschke said in a speech pre­pared for a press con­fer­ence Fri­day.

De­mand for Porsche's sports cars has been re­silient de­spite eco­nomic jit­ters in mar­kets like China, Rus­sia and Brazil. The 911's high-mar­gin flag­ship Turbo ver­sion went on sale in Europe at the end of Jan­uary and is set to bol­ster prof­its this year. The re­vamped Boxster roadster, un­veiled at the Geneva car show ear­lier this month, will be rolled out at the end of April and the hard-top Cay­man ver­sion is set to fol­low later this year. The two cars are be­ing com­bined in the new 718 model line, which fea­tures a newly de­vel­oped four-cylin­der flat en­gine with tur­bocharg­ing. "We an­tic­i­pate to­day to in­crease rev­enue slightly this year and reach profit on the prior-year level," CFO Meschke said in his speech.

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