The performance of Volkswagen AG in the first quarter was stellar but its stake in Porsche AG weighed down its earnings, according to VW’s finance chief. VW accounts for a 49.9% stake in Porsche at equity.
This means that it books the share of profits or losses at Porsche proportional to the size of its stakeholding. Under IFRS regulations on the allocation of the purchase price (PPA effects), the 3.9 billion euro ($5.2 billion) acquisition cost from December 2009 for the Porsche stake is subject to continual non-cash writedowns. In a conference call, CFO Hans Dieter Poetsch said that these accounting charges more than offset VW’s share of profit from Porsche. Within the next year, Volkswagen will seek to subsume Porsche AG’s majority parent, Porsche Automobil Holding SE, giving it full control over the brand as well. When it comes to the group level, it’s notable that all of VW’s core brands posted improvements, driving up by nearly three times the first-quarter operating profit. In particular, this report reveals how quickly the turnaround had been for the flagship VW brand.
[via autonews – sub. required]
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