Porsche posts record profits on back of VW stock gains

FRANKFURT: German luxury sports car maker Porsche posted record annual results Friday on the back of its holding in Europe's biggest car maker Volkswagen but voiced concern about the outlook as growth slows sharply.

Porsche said its year to July 2008 net profit soared nearly 51 percent to 6.39 billion euros (7.21 billion dollars) as the company booked massive gains on its VW shares. Porsche said the contribution from various financial transactions involving stock in VW, in which it has built up a 74 percent stake, rose to 6.83 billion euros from 3.59 billion euros the previous year.

Porsche currently owns a direct stake in VW of 42 percent, and controls about 32 percent more via stock options.
Sales, in contrast, rose only 1.3 percent to 7.46 billion euros. Porsche warned again that 2009 will be a tough year and that it will be forced to reduce production owing to a drop in sales, particularly in the US market.

The Stuttgart-based company said it sold 98,652 of its highly sought after sports cars and sports utility vehicles, an increase of 1.2 percent. Porsche plans to increase its direct stake in VW to more than 50 percent before the end of the year and as it has bought up stock, the price has seen incredible swings on the Frankfurt stock exchange, rising last week at one point to more than 1,000 euros.

That briefly made VW the biggest company in the world by market value. On Friday, the shares were at almost 400 euros, much higher than their intrinsic worth, according to analysts.