By Victoria Waldersee
BERLIN (Reuters) – Porsche SE, Volkswagen’s largest shareholder, warned on Friday it may write down the worth of its stake in Europe’s high carmaker by as a lot as 20 billion euros, within the newest signal of the affect of the price disaster on VW. investor confidence within the automotive producer.
The German automaker is affected by excessive prices, fierce Asian competitors and a bitter, protracted battle with highly effective unions over manufacturing facility closures and pay cuts.
Porsche SE, which owns 31.9% of Volkswagen’s capital and 53.3% of its voting rights, introduced that it plans to write down down the worth of its stake from 7 billion to twenty billion euros.
Primarily based on Volkswagen’s present market capitalization, the stake quantities to roughly 14.3 billion euros.
The automaker, amid tense negotiations with unions over price cuts at its German operations, has been unable to finalize its monetary planning for the yr, forcing Porsche SE to depend on buyer expectations. analysts for its forecasts.
Porsche SE, the holding firm of the Porsche and Piech households, mentioned it additionally expects a writedown of 1 billion to 2 billion euros on its 12.5 p.c stake in luxurious carmaker Porsche AG.
Porsche SE mentioned the writedowns have been tough estimates, citing a “market setting characterised by nonetheless growing uncertainties, weaker demand than initially anticipated in numerous markets and growing geopolitical tensions and protectionist tendencies.”
It now expects its group outcome after tax in 2024 to be “considerably damaging”, withdrawing its forecast of two.4 billion to 4.4 billion euros however nonetheless planning to distribute a dividend for the monetary yr.
Volkswagen’s dividend, one of the crucial necessary sources of money for Porsche SE, is predicted to fall to six.75 euros from 9 euros final yr in keeping with LSEG estimates, after the carmaker’s earnings within the 9 first months of 2024 decreased by a 3rd in comparison with final yr. .
Unions are pressuring Volkswagen administration to additional lower its dividend to chop prices, however the chief monetary officer mentioned final week that the automaker was dedicated to sustaining a payout ratio of a minimum of 30% of revenue after tax.
Analysts warn that the mix of pricing stress, decrease dividends from Chinese language joint ventures and dedicated investments will doubtless depart Volkswagen with near-zero free money circulate within the coming years, which bodes poorly for the monetary stability of Porsche SE.
($1 = 0.9534 euros)
(Reporting by Victoria Waldersee; modifying by Christoph Steitz, Louise Heavens and David Gregorio)
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