It was reported on December 16, 2024 that Germany's Porsche SE may be required to write down up to 20 billion euros in its VW shares.
Less than,Reuters articleIt's because:
- Porsche SE, VW's largest shareholder, has warned that it could write down the value of its VW shares by up to 20 billion euros on December 13, 2024.
- It's the latest sign that VW's cost crisis is shaking investor confidence in the manufacturer.
- VW is struggling with high costs, fierce competition from Asia and a long and bitter dispute with unions over factory closures and wage cuts.
- Porsche SE (PSHG_p.DE) holds 31.91 TP1T shares and 53.31 TP1T voting rights in Volkswagen (VOWG_p.DE).
- The company announced that it plans to write down the value of its shares by between 7 billion and 20 billion euros (approximately 1.12 trillion yen to 3.2 trillion yen).
- Based on VW's current market capitalization, Porsche SE's VW shares are worth about 14.3 billion euros (about 2.288 trillion yen).
- VW has been unable to complete its financial plan for the year due to tense negotiations with unions over cost-cutting in its German operations.
- As a result, Porsche SE had to rely on analyst estimates as the basis for its forecasts.
- Porsche SE is the holding company for the Porsche and Piëch families.
- The company also said it expects to take an impairment charge of 1 to 2 billion euros ($1.6 billion to $3.2 billion) on its stake in Porsche AG (P911_p.DE) at 12.5%.
- Porsche SE explained that these impairments were only estimates.
- The reasons cited include:
- Increased uncertainty in the market environment
- lower than expected demand in some markets
- Rising geopolitical tensions and protectionist tendencies
- Porsche SE expects group results after tax to be "significantly negative" in 2024
- As a result, the company has withdrawn its initial earnings forecast of 2.4 billion to 4.4 billion euros (approximately 384 billion to 704 billion yen).
- Nevertheless, the company expects to continue paying dividends in fiscal 2024.
- VW dividends are one of Porsche SE's most important sources of cash income
- VW's dividend is expected to fall by about 251 TP1T to 6.75 euros (about 1,080 yen) per share from 9 euros (about 1,440 yen) last year, after profits for the first nine months of 2024 fell by a third compared to the same period last year, according to estimates by the London Stock Exchange Group (LSEG).
- Unions are pressuring management to further cut VW's dividend to cut costs
- But the CFO said last week that the company was sticking to its policy of paying out at least 301 billion yen of VW's after-tax profits as dividends.
- Analysts warn that a combination of factors could cause VW's free cash flow to approach zero over the next few years:
- Price competition pressures
- Decreasing dividends from Chinese joint ventures
- Securing funds through continued investment
- These developments could have a negative impact on the financial stability of Porsche SE.
Source:Porsche SE to take up to $21 billion impairment on Volkswagen stake
I'm Rika, the author of this article. Ever since Porsche 911 became my favorite car, I've become totally addicted to Porsche, and I can't stop loving Porsche, so I started this blog. My favorite cars are 911 Carrera (991.2), 911 Carrera Cabriolet (992.1), and 911 Carrera T (992.1).
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