- Substantial expenses looming for electric-car development
- Revamped 911 lineup, 718 sports car models in focus in 2016
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 emissions-cheating 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 second-largest 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.