Porsche Forecasts Return to Profit on Panamera Sedan, Lower Merger Costs

Porsche SE, the maker of the 911 sports car, forecast its first profit in three years in 2011 on sales of the Panamera sedan and as costs linked to a merger with Volkswagen AG decline.

Porsche, which will switch to calendar-year reporting next year, said it aims to break even in the last five months of 2010. The net loss in the 12 months ended July 31 narrowed to 454 million euros ($633 million) from a loss of 3.56 billion euros a year earlier, the Stuttgart, Germany-based company said today in a statement.

Matthias Mueller, who took the helm of Porsche’s carmaking operations last month, is tasked with completing Porsche’s merger with VW next year and expanding models across four vehicle lines to double annual sales to 150,000 cars and sport- utility vehicles by 2014. VW acquired 49.9 percent of the Porsche AG operating unit after Porsche last year failed in a hostile takeover attempt for Europe’s largest carmaker.

“Improving vehicle sales, especially the Panamera and Cayenne models, will be the driving force in Porsche’s campaign to return to profit,” said Frank Schwope, an analyst at NordLB in Hanover, Germany, who recommends holding the stock. Porsche deliveries may approach 100,000 in 2011 compared with about 81,850 in the 12 months through July, he said.

Shares Jump

The preferred stock rose 1.84 euros, or 5 percent, to 39.00 euros, the steepest jump in almost 3 months, in Frankfurt. The common stock is 90 percent-controlled by the founding Porsche and Piech families and 10 percent by the emirate of Qatar.

Porsche will pay a dividend of 10 cents per preferred share, which don’t carry voting rights, compared with 5 cents.

Mueller, 57, was appointed today to the management board of the Porsche SE holding company in charge of products and technology.

Full-year revenue, reported last month, jumped 18 percent to a record 7.79 billion euros, while deliveries including the $106,000 Panamera sedan and Porsche’s best-selling model, the Cayenne SUV, rose 8.8 percent to 81,850 vehicles.

Operating income in the carmaking business reached 1.19 billion euros and the pretax profit margin was 16 percent, Porsche said today, without giving comparison figures.

Porsche remains exposed to “considerable risks” stemming from unresolved U.S. lawsuits filed by VW stock short sellers who claim the carmaker secretly cornered the market in VW shares and inflicted more than $1 billion in losses, Schwope said.

Merger Delay

Volkswagen may delay the merger until the hedge fund lawsuits and German tax issues are resolved, Max Warburton, an analyst at Sanford C. Bernstein in London, said in a report today.

Porsche has said a ruling by the U.S. Supreme Court earlier this year limiting foreign investors’ ability to sue companies based abroad in U.S. courts will help fight U.S.-based suits.

VW CEO Martin Winterkorn said on Sept. 29 that integration of Porsche is “in full swing” and will be completed as planned next year.

At the Paris Motor Show this month, Porsche presented the new $282,000 911 Speedster. The sports-car maker in July approved the production of the 918 Spyder hybrid, a sports-car that may be priced at about 500,000 euros.

Winterkorn, VW Chief Financial Officer Hans Dieter Poetsch and Mueller will hold a press conference in Stuttgart Oct. 19 to discuss the results. Porsche shareholders will meet Nov. 30 to vote on a capital increase of about 5 billion euros to take place the first half of 2011.

To contact the reporter on this story: Andreas Cremer in Berlin at acremer@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net.

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