| |
Porsche Sales Rise 18.7% in H1 FY 2007/08
20 Mar 08
Porsche maintained its strong sales performance in the first half of the 2007/08 financial year despite fears of recession.
Global Insight Perspective | | Significance | Porsche is confident that its sales in fiscal year 2007/08 will exceed the figure recorded in FY 2006/07 after posting a first-half increase of 18.7% y/y in global sales to 46,600 units. | Implications | Porsche is looking to continue on the course of substantial sales growth and profitability that it has pursed in recent years despite the spectre of the U.S. credit crunch and resultant fears of a global economic slowdown. | Outlook | Porsche's impressive sales in the first half of its financial year indicate that the company is well on track to set yet another sales record, and that its short- and medium-term financial strength is assured. This is important as Porsche needs to maintain a high level of liquidity and a strong financial performance as it looks to acquire a majority stake in VW. |
Porsche Posts Robust Sales Growth in H1 FY 2007/08 Porsche has announced a healthy increase in its sales during the first half of its financial year (FY) 2007/08, which started in August 2007 and ended on 31 January 2008. The company announced an extremely robust 18.7% year-on-year (y/y) increase in sales to 46,600 units in the six-month period until the end of January. The result is highly encouraging and matches the extremely positive financials that Porsche announced for the same period at the beginning of March (see Germany: 5 March 2008: Porsche Net Profit Jumps 44% in H1 FY 2007/08), which showed that sales revenues increased by 14% y/y to 3.49 billion euro, while net profit enjoyed a marked 44.3% increase to 1.295 billion euro (US$2 billion). Porsche's global sales were helped during the period by the introduction of the Cayenne GTS model variant, with the refreshed Cayenne model introduced at the beginning of 2007 continuing to provide Porsche's sport utility vehicle (SUV) model range with strong sales impetus. The launch of a number of high-end 911 variants, such as the 911 Turbo Cabriolet and 911 GT2, helped boost the model's profile, even if these high-end, high-profitability models only had a minimal effect on overall sales volume increases. The entry-level 2.7-litre Cayman and Boxster models continued to prove highly popular. In its first-half report, Porsche said that, although it is aware and concerned about the credit situation in the United States, it believes that the company's sales prospects remain excellent. "Even if the financial and economic crisis spreads in the USA, Porsche intends to emulate the high sales figures of the previous year in the 2007/2008 fiscal year", it said. Porsche noted that economic risks intensified throughout the world during the reporting period, mainly because of the rising oil price, the weak U.S. dollar, and "the clear risk of recession" in the United States. However, it added, "The situation is in fact better than the mood in many places. This holds particularly true in Germany and the euro zone where the economy remains stable." Porsche's optimism would appear to be borne out by the company's robust sales figures in the U.S. market, which took in the period during which the U.S. credit crisis started to take effect. The company sold 16,209 units in the United States and Canada during the first half of the financial year, an 11.4% increase on the equivalent period in 2006/07. The carmaker said that it is prepared for the acceleration of recession in the United States and has significantly reduced inventories in the country. Outlook and Implications There is an argument that Porsche is relatively “recession-proof”, and the company's highly impressive sales figures for the first half of its financial year between August 2007 and January 2008 would appear to bear out this hypothesis to some extent. There are far higher numbers of high-net-worth individuals in the global population, insulated with even larger amounts of liquid cash, than there were during the last major global downturn in the early 1990s. These wealthy individuals underpin Porsche's customer base, meaning that the sports-car manufacturer is less likely to see a significant downturn in sales during times of economic hardship than a volume carmaker, whose customer base is hardest hit by increasing living costs and the threat of unemployment. Porsche went close to going bankrupt in the last recession, but the differences between then and now are substantial. In the early 1990s Porsche had a model line-up that was struggling to attract new buyers to the marque, while its cars were also hugely costly to build and engineer. This meant that when recession hit, Porsche struggled badly as a result of its poor margins. This changed when current Chief Executive Officer (CEO) and Chairman Wendelin Wiedeking joined the company in 1993. He masterminded the concept of the hugely popular Boxster entry-level sports car and the strategy of creating extensive component and module synergies between the Boxster and the flagship 911 model. This has helped turn Porsche into the world's most profitable carmaker over the last decade, giving the company the cash earnings to underpin its acquisition of a 31% shareholding in Volkswagen (VW), which it now plans to turn into a majority shareholding (see Germany: 4 March 2008: Porsche Board Agrees to Increase Stake in VW to 51%).Porsche needs to maintain this strong sales and earnings performance in order to underwrite its VW buyout. The first-half sales results, especially in the U.S. market, indicate that Porsche is doing this despite the ongoing threat of global recession.
|
|
|
