Porsche Profit Rises as 911 Sales Roar

STUTTGART, Germany Reuters reported that German sportscar maker Porsche AG defied gloomy economic conditions on Friday, showing stronger first half profits driven by demand for its flagship high-margin 911 model.

Chief Executive Wendelin Wiedeking also told an annual shareholder's meeting in the German city of Stuttgart that Porsche was considering a New York listing -- news which helped shares hit an all-time high.

Porsche said pre-tax profit in the first six months of its fiscal year to January 31 rose 10.2 percent to about 154 million euros ($135.8 million), while sales rose 6.3 percent to 1.83 billion euros. It said full-year profits were expected to match the previous fiscal year.

Wiedeking said the firm's key U.S. market had not suffered long from the effects of the September 11 airliner attacks in New York and Washington.

``The light seems to be green again,'' he said.

Profits rose while unit sales were nearly flat, increasing only 0.7 percent to 23,370 cars.

The announcement that Porsche was in talks over a listing on the New York Stock Exchange (news - web sites) came after the company was removed from the MDAX index of German midcap stocks in September for refusing to publish quarterly earnings statements.

``The New Yorkers would like to have us on their exchange -- without the quarterly reports,'' Wiedeking said, apparently referring to a secondary American Depository Receipt (ADR) listing which would not require such reports.

He reiterated his chagrin at the German stock exchange's decision, saying it was ``bad joke.''

SHIFT TO HIGHER MARGIN 911

The company said it sold 10,280 of its entry-level Boxster model, a drop of 13.4 percent on the previous year but sales increased 15.5 percent for the pricier, revamped 911s -- the Porsche of choice for those with deep pockets.

``Demand for both models, particularly the new 911, is strong across the globe,'' the world's most profitable car maker said in a statement.

In its only reaction to a faltering economy which has battered most German and U.S. car makers, Porsche said it would concentrate on selling its higher margin 911s.

``Even if first half sales figures are not matched in the whole year 2001-2002 due to global economic uncertainty, the company expects full year pre-tax profits to be at least at the same level as in the previous year, thanks to a shift to higher value sports cars,'' it said.

The company has not always weathered global turndowns so well -- its sales plummeted to 4,500 from 11,000 between 1993 and 1994.

This time around, sales have stabilized and the stock rapidly recovered from a 34-month low of 199 euros in the weeks immediately after September 11.

Porsche shares were 3.78 percent up at 459.75 euros by 1338 GMT, just off an all-time high of 459.99 which they set earlier in the session. The pan-European Eurostoxx auto index by contrast dipped 0.45 percent.

``It is one of those safe haven auto stocks,'' said Hendrik Emrich, an analyst at Berenberg Bank in Hamburg. ``I think it's a fair price range, I have a range of 400 euros to 450.

``It's already at a premium of roughly 40 percent as far as PER (price-to-earnings ratio) is concerned, but you can't compare Porsche with other car producers because it's somewhere between a car manufacturer and a pure luxury goods provider.''

In a departure from its luxury niche, Porsche is to launch its new Cayenne sports utility vehicle (SUV) in the autumn, a move Porsche's Wiedeking said would boost profits and sales.

Some observers think Porsche has missed the SUV craze that swept America, where the company sells half of its cars, but its plan to build only 25,000 of them was sufficiently conservative to ensure it sold them all, said Emrich.

The company also hopes Porsche sports car owners might look on the Cayenne as a second car, a more practical runabout than the 911s which cannot carry much more than a golf bag or two.