Following its failed takeover of Volkswagen, Porsche has posted a $6.5 billion pre-tax loss for the fiscal year ended July 31st. Porsche attempted to take over the much larger Volkswagen earlier this year, but failed to complete the acquisition as credit markets dried up.
Porsche warned stakeholders losses could reach $7.4 billion as the company recovered from massive losses related to the failed Volkswagen takeover. As a result of the failed acquisition, Porsche fired CEO Wendelin Wiedeking and CFO Holger Härter.
One year ago Porsche posted a pre-tax profit of $12.8 billion.
Despite the pre-tax loss, Porsche claims it posted double-digit margins in operating profit, although the German automaker failed to release specific figures. “Porsche remains the most profitable automobile manufacturer in the world,” the company said in a statement.
According to The Financial Times Deutschland, lenders have agreed to loan Porsche $12.65 billion now that it is a subsidy of Volkswagen.
11/13, 6:00 PM
posted by:
idrinorbarsaku
To me, it looks like VW just b!tch slapped them down! They got put in the right place!
11/13, 6:01 PM
posted by:
jayjc08
WHOA. Didn’t see this one coming! Understanding the economy isn’t that good, I expected Porsche to do so-so in terms of sales… but why the huge loss? I don’t understand…
11/13, 6:06 PM
posted by:
reedfast
^they tried to buy VW. thats not cheap
11/13, 6:43 PM
posted by:
Smegley Wanxalot
I think the US taxpayer needs to bail out poor Porsche
11/13, 6:56 PM
posted by:
johnnycanuck
Porsche is a perfect candidate for a bailout since most of them look like bathtubs to begin with.
11/13, 9:34 PM
posted by:
Borat
With all the profits from being Number 1 car manufacturer VW does need a tax relief.
11/14, 1:55 AM
posted by:
cocojoe53
They played “All In” with their bold takeover attempt of VW, and lost. Just to think it was all fueled by profits from a rebadged VW product.
11/14, 4:45 AM
posted by:
scratchy
@jayjc08 , the borrowed a lot of cash to buy VW just before the crisis hit and now they have to pay that money back.
11/14, 2:32 PM
posted by:
leftwingagenda
that’s the thing scratchy…they borrowed billions, the merger didn’t go through, so where did the billions go? how did they end up so deep in the hole? did lawyers cost 6.5 billion? something doesn’t make sense to me here ;P
11/15, 2:43 AM
posted by:
A4
i didn’t know Porsche even made enough cars to lose $6.5B.
11/15, 10:12 AM
posted by:
livelyjay
They spent A LOT of money on the attempt to acquire VW and WAY TOO MUCH money developing the ugly as hell Panamera.
11/15, 1:42 PM
posted by:
Rafa LL
I still like the idea of Porsche over VW, but hate VW owning Porsche.
11/15, 2:28 PM
posted by:
Four_Rings
Give it a year…Porsche will claim it’s rightful place once again.
11/15, 6:14 PM
posted by:
scratchy
@ leftwingagenda hedge fund (mis)adventures.
11/16, 9:16 AM
posted by:
n2k
A4: Traditionally exotic car manufacturers are margin based businesses as opposed to volume. Manufacturers sell extreme styling and performance but charge a high premium. Porsche’s business model is based around a balance of volume, healthy profit margins (thanks to drastic cost cutting measures and component sharing): combine this with a favorable brand perception, a strong, worldwide client & service network and its not hard too see why they’re at the top of their game.
11/16, 10:27 AM
posted by:
shaver
Least of their problems at this point. They are losing control of the companies direction and future to VW.
11/16, 11:47 AM
posted by:
The Stig
For a smaller outfit like Porsche that’s a monumental hole.
11/16, 12:29 PM
posted by:
scratchy
@The Stig , Porsche SE is an investment and banking company who also owns a car manufacturing division, Porsche AG. most of the money they make comes from banking and investments , not from selling cars.
11/16, 3:25 PM
posted by:
Need more oil for GM
F’in awesome. Down with teh Germans. Go home.
This is GM Country. What is good for General motors is good for America
11/17, 3:06 AM
posted by:
n2k
scratchy: thats interesting i didnt know that. Would that division have grown organically from their vehicle financing/leasing operations or were they in the money business before they set out into vehicle manufacturing?
11/17, 3:42 AM
posted by:
n2k
Left wing agenda: I could be wrong here but this is how i understand it all went down: Take overs cost money. You need to have a majority shareholding in order to control the company and make decisions. From what i can tell VW’s shares are divided amongst unions, collective investors and private estates. Porsche’s plan was to buy up a size-able chunk of vw and use the profits from those shares to buy up the rest of the company: very cunning. Unfortunately they miss-timed it. They spent money that wasn’t theirs to pull of this heist and to make matters worse the market turned right in the middle of their dealings so the shares they were hoping to use to pull off this coup declined in value, unfortunately the interest demands from their creditors grew more demanding and unmanageable as they couldn’t service the debt. Also the unions werent exactly going to roll over so that didnt exactly help matters. Now with their resources exhausted and their financial defenses compromised (as a result of tight credit markets) VW dug into their war chest and pulled out a reverse takeover. Classic!