FILE PHOTO: A Volkswagen logo is seen at the New York International Auto Show Press Preview, in Manhattan, New York City, U.S., March 27, 2024. REUTERS/David Dee Delgado/File Photo
BERLIN: Porsche SE, Volkswagen’s top shareholder, has warned it may write down the value of its stake in Europe’s top carmaker by up to 20bil or about US$21bil, in the latest sign of how VW’s cost crisis has shaken investor faith in the carmaker.
The German carmaker is suffering from high costs, fierce Asian competition and a prolonged bitter conflict with powerful unions over plant closures and wage cuts.
Porsche SE, which owns 31.9% of Volkswagen’s equity and 53.3% of its voting rights, said last Friday it expects to write down the value of the holding by 7bil to 20bil.
Based on Volkswagen’s current market capitalisation, the stake is worth around 14.3bil.
The carmaker, in the midst of tense negotiations with unions over cost cuts at its German operations, was unable to complete its financial planning for the year, forcing Porsche SE to rely on analysts’ expectations for its forecasts.
Porsche SE, the holding firm of the Porsche and Piech families, said it also expects an impairment of 1bil to 2bil on its 12.5% stake in carmaker Porsche AG.
Porsche SE said the impairments were rough estimates, citing a “market environment with further increasing uncertainties, lower demand than originally expected on various markets and increasing geopolitical tensions and protectionist tendencies”.
It now expects its group result after tax in 2024 to be “significantly negative”, withdrawing its forecast of 2.4bil to 4.4bil but still expecting to distribute a dividend for the financial year.
Volkswagen’s dividend, one of the most important cash sources for Porsche SE, is set to fall to 6.75 from 9 last year according to LSEG estimates after the carmaker’s earnings in the first nine months of 2024 were down by a third from a year ago. — Reuters
