VW in very strong position as profits better than expected
Volkswagen’s cash pile has continued to grow since December and second-quarter operating profit easily beat expectations, Europe’s largest carmaker said on Thursday.
“Retaining our ability to act financially has the highest priority,” Chief Financial Officer Hans Dieter Poetsch said in a statement.
VW group’s second-quarter operating profit sank 56 percent to 928 million euros, but still exceeded the average estimate of 628 million euros from a Reuters poll of 15 analysts.
Automotive net cash stood at 12.3 billion euros ($17.34 billion) by the end of June, growing by just over half since the end of last year thanks to 4.3 billion euros in free cash flow during the first half.
This leaves Volkswagen with a war chest easily capable of buying sports car maker Porsche AG.
Last week, Porsche’s two top executives, CEO Wendelin Wiedeking and finance chief Holger Haerter, left the company, removing the last big hurdle to a deal that would bring the iconic maker of 911 into the VW group as its tenth brand.
The deal will also see the Gulf state of Qatar buy Porsche stock options in VW to become VW’s third-largest shareholder after the Porsche family and Lower Saxony with an estimated 17 percent.
As part of a deal, financial sources have said VW is considering seeking approval from shareholders to issue new non-voting preferred stock to help raise enough money that a purchase of Porsche would not threaten VW’s ‘A-’ credit rating.
Source: Automotive News
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