Porsche profits increase dramatically

Porsche profits increase dramatically
Photo: DPA
German luxury car maker Porsche said Tuesday that its first-half profit leapt fourfold owing to its stake in Volkswagen, but that auto sales were down and it could not give a full-year forecast.

Porsche’s net profit jumped to €5.5 billion ($7.3 billion) in the six months from August to January, mainly as a result of a spike in the value of VW shares in October, the company said.

Porsche owns 50 percent of VW, the biggest European car maker, and wants to raise that holding to 75 percent.

Pre-tax profit climbed to €7.34 billion from €1.66 billion, a result that also stemmed largely from transactions in cash-settled options on VW shares.

Cash-settled options are stock option contracts under which settlement is done via the payment of cash equal to the difference between the market value and the contractual value when the option is exercised or expires.

Porsche has used such VW-based instruments to make huge profits in the past two years.

Porsche car sales fell meanwhile, by 9.2 percent on a 12-month basis, to €3.32 billion.

The company said that no reliable forecast for the near term was possible, with neither Porsche nor VW able to escape the effects of a sector-wide slump, although VW expected to do better than rivals.