Porsche shares fall in Frankfurt; fears of industrial action following pressure over VW’s job cuts
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(Il Sole 24 Ore Radiocor) - Porsche Automobil Holding SE slows down on the Frankfurt Stock Exchange (DAX 30), after formally urging Volkswagen, of which it is the largest shareholder, to step up efforts to reduce costs and overcapacity. The firm stance taken by the holding company has reignited concerns about the scale of the industrial dispute looming between VW, the trade unions and the German public authorities over the cuts. As a result, the car manufacturer’s share price has fallen by around 28 per cent since the start of the year.
Last Friday, Porsche SE, which holds over 53 per cent of Volkswagen’s ordinary shares, announced that it had recorded write-downs of €3 billion in the first half of the year, relating to its investment in VW, and a further €200 million on its direct stake in Porsche AG. As a result of these write-downs, the holding company posted a net loss of €2.22 billion in the first six months of the year, compared with a profit of €338 million in the same period last year. In recent months, VW has outlined far-reaching restructuring measures to get the company back on track, but these have not yet been finalised, pending negotiations with workers’ representatives – who are already up in arms – and with the public authorities. A stalemate has therefore ensued.
In this context, ‘in light of the ongoing challenges, Porsche SE is urging its key investees to rigorously implement far-reaching solutions to improve their competitiveness. As the majority shareholder, Porsche SE actively supports this process and has clear expectations regarding profitability, capital efficiency and cost structure. Now that Porsche AG has negotiated a comprehensive package for the future, it is up to Volkswagen to take swift and decisive action”, states Friday’s press release.
“The Volkswagen Group finds itself at a historic crossroads. The decisions Volkswagen takes now will determine its future. For the sake of the company and its long-term competitiveness, everyone must now shoulder their responsibilities. The longer decisions are postponed, the more serious the problems will become. The focus must now be exclusively on what is necessary from a commercial and economic perspective. All other considerations must take a back seat,” was the clear statement from Hans Dieter Pötsch, Chairman of the Supervisory Board of Porsche SE.
“It is imperative to reduce excess production capacity, significantly lower costs and substantially strengthen the Group’s decision-making and operational capabilities. As the majority shareholder of Volkswagen AG, Porsche SE therefore supports the Group’s board of directors and its proposals. The aim is competitiveness. Every option must be considered in order to achieve this. Otherwise, Volkswagen risks falling permanently behind its international competitors,” echoed Johannes Lattwein, a member of the Board of Management responsible for finance and IT.
