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    Jan 26, 2007 10:32:33 AM

    EricAlain
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    Record earnings for Porsche in H1 06/07

    Porsche AG released this morning stellar earnings ....

    Profit Before Tax reached Euro 1.45bn (vs Euro 278m in 05/06). This number is including various positive 1-off items like a mark to market value of their VW stake ( Euro 520m) and other elements.

    Turnover declined slightly by 2.9% to Euro 3.02bn

    Unit sales:
    Boxster/Cayman : 12,170 units (+21.5%)
    911 : 17,340 (+15.7%)
    Cayenne : 10,225 units (-39.8%)
    Carrera GT: 15 units
    TOTAL: 39,750 units (-5.9%)


    Sales by region:
    Germany: 5,540 units (+0.9%)
    North America: 14,570 units (-19.2%)
    RoW: 19,640 units (+5.0%)
    TOTAL: 39,750 units (-5.9%)

    Jan 26, 2007 10:57:25 AM

    Porsche-Jeck
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    Reply to: EricAlain

    Re: Record earnings for Porsche in H1 06/07

    If you consider the enormous amount of profit generated from financial investments (VW, FX-hedge gains etc.) PAG seems to turn into a bank with an affiliated carmaker

    Jan 26, 2007 11:07:15 AM

    EricAlain
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    Reply to: Porsche-Jeck

    Re: Record earnings for Porsche in H1 06/07


    You're right some people argue, Porsche is a hedge funds that happen to make cars for themselves and for other traders and finance geeks.

    Jan 26, 2007 11:17:07 AM

    Porsche-Jeck
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    Reply to: EricAlain

    Re: Record earnings for Porsche in H1 06/07

    LoL - you are a financial analyst, aren't you

    Jan 26, 2007 12:37:09 PM

    EricAlain
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    Reply to: Porsche-Jeck

    Re: Record earnings for Porsche in H1 06/07



    Yes I'm ...

    Jan 26, 2007 7:37:32 PM

    SciFrog Offline
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    Reply to: EricAlain

    Re: Record earnings for Porsche in H1 06/07

    FX hedge gains allow them to sell the cars cheaply in the US.

    Jan 26, 2007 11:40:30 PM

    nberry Offline
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    Reply to: EricAlain

    Re: Record earnings for Porsche in H1 06/07

    Quote:
    EricAlain said:
    Porsche AG released this morning stellar earnings ....

    Profit Before Tax reached Euro 1.45bn (vs Euro 278m in 05/06). This number is including various positive 1-off items like a mark to market value of their VW stake ( Euro 520m) and other elements.

    Turnover declined slightly by 2.9% to Euro 3.02bn

    Unit sales:
    Boxster/Cayman : 12,170 units (+21.5%)
    911 : 17,340 (+15.7%)
    Cayenne : 10,225 units (-39.8%)
    Carrera GT: 15 units
    TOTAL: 39,750 units (-5.9%)


    Sales by region:
    Germany: 5,540 units (+0.9%)
    North America: 14,570 units (-19.2%)
    RoW: 19,640 units (+5.0%)
    TOTAL: 39,750 units (-5.9%)



    I assume the almost 20% reduction in sales for North America is related to the Cayenne? Also Porsche continues to combine Cayman and Boxster sales. I suspect individually the models are not doing very well.

    BTW, I agree Porsche's hedging has had a very positive impact on profitability. However, it is my understanding that the hedge contract will end sometime next year.

    Jan 27, 2007 1:10:13 AM

    Porsche-Jeck
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    Reply to: nberry

    Re: Record earnings for Porsche in H1 06/07

    Quote:
    nberry said:

    BTW, I agree Porsche's hedging has had a very positive impact on profitability. However, it is my understanding that the hedge contract will end sometime next year.



    Nick, you're right on this one - either Porsche will generate smaller profit margins in the future or they have to increase prices in the US (actually I'm not happy to support the US-market by paying inflated prizes in Germany)
    But I'm not afraid about PAG's future financial health - the profit margins leave enough space to react to an ever increasing competition
    As for your Cayman/Boxster reference: don't become a victim of PAG's marketing departement It's just ONE platform (cab + coupé, just like 997) - and overall sales are up by 25% or so for the 987 line-up

    Jan 27, 2007 11:42:32 PM

    WBH
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    Reply to: EricAlain

    Re: Record earnings for Porsche in H1 06/07

    Doubt anyone in the hedge/pvt eq/inv banking prop trading businesses is comfortable w/an auto co. (or any non-smart, non-financial corporate entity) playing FX/financial engineering games to achieve earnings gwth.....there's a reason why smart 30-40-something yr old hedgies have the net worth they do....and why 50-60-something-yo auto execs have their net worth (and need to often fly commercial or beg use of a corporate plane)....

    Actually, from a macro perspective, incredible that MB/P/F are unable to meaningfully raise MSRPs (or incr vols of S/CL/SL or Turbos or F) in the US mkt, despite the enormous wealth creation in US in past 10-15 yrs...and w/a younger class of affluent than ever before (logically more sports/GT car-oriented than older, more infirm wealthy of yesteryear)....to provide context, I suspect, if 90% of the affluent actually cared about cars, a couple of small, but elite suburbs on the SF Peninsula could easily buy F's entire global produc vol every yr....and these suburbs over the past 10 yrs have been increasingly populated w/younger high-achievers in their prime sports/GT car-buying years....

    Today's S550 sells for some $5K less than S500 of 15-odd yrs ago, despite enormous advances in safety/performance/features/reliability/low-mtce ...and DCX offers much cheaper 2yr leases on these cars than it did 15 yrs ago in a higher interest rate envmt in which leases were 3yrs+ duration...

    Have heard MB is increasingly allocating S-Class to better FX mkts like China...and is reducing US CL allocs to prop up resale values....

    And F is building a factory leasing pgm for US mkt, using the Fiat balance sheet....surprisingly, even F is very MSRP-conscious and alloc vol-sensitive in US mkt, despite 100% one-yr resale value and a deep base of recession-proof, repeat buyers....

    Will be intriguing to see how P prices/leases the 997TT w/PDK, PK and PSE in the competitive, lease pmt-oriented/resale value-sensitive high-end US mkt where product life cycles and fashionability half-lives seem to keep decreasing....

    Jan 28, 2007 12:29:52 AM

    LoranTw
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    Reply to: WBH

    Re: Record earnings for Porsche in H1 06/07

    Quote:
    VKSF said:
    Doubt anyone in the hedge/pvt eq/inv banking prop trading businesses is comfortable w/an auto co. (or any non-smart, non-financial corporate entity) playing FX/financial engineering games to achieve earnings gwth.....



    Then maybe a bank should partner with them...the way they are growing that would be a huge business.

    Jan 29, 2007 1:27:01 AM

    SciFrog Offline
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    Reply to: WBH

    Re: Record earnings for Porsche in H1 06/07

    Quote:
    VKSF said:Will be intriguing to see how P prices/leases the 997TT w/PDK, PK and PSE in the competitive, lease pmt-oriented/resale value-sensitive high-end US mkt where product life cycles and fashionability half-lives seem to keep decreasing....



    Funny, few people leases high end cars around us here. And most don't care about resale value either. They just buy the car they want in cash...

    As to why US cars are too cheap compared to the rest of the world, the USD is really undervalued at the moment, partly because of the vast trade deficit in the US. I was shocked on my last trip to France to see how expensive things were in a country where median salary is <20,000 euros a year. True USD value is more around 1 (parity). European manufacturers cannot raised the price in the competitive US market. Long term, if the USD stays this low, they will have to build cars in US/Canada to restore margins, or accept lower volumes. Ferrari might be an exception as they can probably raise prices 50% tomorrow and still sell their whole production. Not sure why they don't do it... Maybe because they are run by FIAT, one of the worst managed car manufacturer in the world... Hopefully Jean can shake things up

    Jan 29, 2007 10:59:44 AM

    EricAlain
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    Reply to: SciFrog

    Re: Record earnings for Porsche in H1 06/07


    Porsche is not using FX gains (that are declining) to lower sticker prices in the US. I believe they just cannot raise prices in the US and they are fortunate enough to still benefit from FX gains otherwise margins would melt like snow in the sun.

    Porsche is using compound FX options (ie options on options) and they are fully hedge until 2009/2010. For sure rates aren't as attractive as they use to be.... This being said, Porsche is using the flexibility of those options to smooth the earnings profile by not using them all at once but by using only some of them to keep some powder dry for the rainy days...

    Regarding Fiat, Yes it was a very badly run company BUT now things have changed radically and Sergio Marchionne is doing great things there and not only at Fiat Auto.

    Jan 30, 2007 12:19:32 AM

    SciFrog Offline
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    Reply to: EricAlain

    Re: Record earnings for Porsche in H1 06/07

    They must have had very strong convictions about a higher EUR and deep pockets to bet so much on a higher EUR back then in 2000-2003 if they are indeed fully hedged until 2009, cause they could not have done it after (if you consider hedged means below 1.10)
     
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