Porsche wants to cut cost
From the Financial Times:
Porsche, the German luxury sports carmaker, plans to introduce a cost-cutting programme to compensate for the company's hedging contract expiring after 2007.
"In the long term, we will have to live with an adverse dollar. There is no way out. We have to have a strategic answer for currency fluctuations," Wendelin Wiedeking, Porsche chief executive, told FT Deutschland, the FT's sister paper.
The weak dollar has already led to profit warnings from many European vehicle makers as well as cost-savings initiatives from Volkswagen and DaimlerChrysler.
In preparation for the continuing weakening of the dollar, Porsche is launching a programme to increase productivity and efficiency. The programme will also include job cuts on the production side, with vacant positions left unfilled.
Porsche, which generates a gross profit of Euro 1bn ($1.25bn) on sales of Euro 6.35bn, is the world's most profitable carmaker. However, a large part of its profit comes from currency hedging. Analysts estimate that currency hedging at Porsche amounts to about Euro 700m.
Georg Stürzer, analyst at HVB, expects an annual profit increase of Euro 174m. "If Porsche manages to save a further 2-3 per cent on the purchasing side, which is feasible, Porsche could catch up on the Euro 700m hedging profit in three years," Mr Stürzer said.
The sports carmaker has long been the heaviest user of hedging and has hedged its dollar exposure for at least five years.
"Our currency hedging strategy had one single purpose: we buy time to prepare ourselves for the situation when the currencies run against us," said Mr Wiedeking.
Mr Wiedeking was confident that, even after 2007, when the hedging contract expires "profits will not receive a dramatic hit".
Mr Wiedeking also said that staff would have to be prepared for changes to come. "We are in intensive talks with our employees, for example about the infamous five-minute break per hour rule," said Mr Wiedeking.
DaimlerChrysler has already tried to abolish that rule - without success.
Porsche, the German luxury sports carmaker, plans to introduce a cost-cutting programme to compensate for the company's hedging contract expiring after 2007.
"In the long term, we will have to live with an adverse dollar. There is no way out. We have to have a strategic answer for currency fluctuations," Wendelin Wiedeking, Porsche chief executive, told FT Deutschland, the FT's sister paper.
The weak dollar has already led to profit warnings from many European vehicle makers as well as cost-savings initiatives from Volkswagen and DaimlerChrysler.
In preparation for the continuing weakening of the dollar, Porsche is launching a programme to increase productivity and efficiency. The programme will also include job cuts on the production side, with vacant positions left unfilled.
Porsche, which generates a gross profit of Euro 1bn ($1.25bn) on sales of Euro 6.35bn, is the world's most profitable carmaker. However, a large part of its profit comes from currency hedging. Analysts estimate that currency hedging at Porsche amounts to about Euro 700m.
Georg Stürzer, analyst at HVB, expects an annual profit increase of Euro 174m. "If Porsche manages to save a further 2-3 per cent on the purchasing side, which is feasible, Porsche could catch up on the Euro 700m hedging profit in three years," Mr Stürzer said.
The sports carmaker has long been the heaviest user of hedging and has hedged its dollar exposure for at least five years.
"Our currency hedging strategy had one single purpose: we buy time to prepare ourselves for the situation when the currencies run against us," said Mr Wiedeking.
Mr Wiedeking was confident that, even after 2007, when the hedging contract expires "profits will not receive a dramatic hit".
Mr Wiedeking also said that staff would have to be prepared for changes to come. "We are in intensive talks with our employees, for example about the infamous five-minute break per hour rule," said Mr Wiedeking.
DaimlerChrysler has already tried to abolish that rule - without success.