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Porsche Expects Stable Earnings in 2014

March 17, 2014
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Porsche foresees its 2014 earnings to be stable as it invests for expansion in China and the United States.

In a statement, the sports car manufacturer said that its investment spending will be focused on expanding its distribution network in emerging markets such as China. The company plans to have 30 new dealerships in the said country in 2015.

In the United States, Porsche plans to invest $100 million, but did not give a timeline.

Porsche has enjoyed consistent earnings growth as demand remained strong for luxury autos. According to the automaker, its operating profit climbed 6 percent ahead of last year to €2.58 billion ($3.58 billion). The company expects their operating profit in 2014 to remain in the same level as last year. Chief Financial Officer Lutz Meschke said in a speech that they are “well prepared for the current fiscal year.”

Deliveries worldwide also increased, allowing the carmaker to boost its revenues. In 2013, global deliveries went up 15 percent to 162,145 cars and SUVs. The significant increase was attributed to the release of the new 911 variants, as well as high demand for the Boxster roadster and Cayman sports car.

Porsche expects more deliveries for this year, with Chief Executive Officer Matthias Mueller saying that the company will surpass 200,000 in annual deliveries next year. The said number for deliveries is now set three years earlier than previously targeted, as the carmaker takes into consideration the demand for the new Macan compact SUV which will roll into showrooms starting next month.

The Macan is Porsche’s next SUV, following the Cayenne. It is predicted to outsell the brand’s bigger SUV and its current sales leader.

One thing which suggests that Porsche will continue to do well this year and possibly reach its 2014 earnings target is its return on sales. The brand has the highest profit margin of any division at the Volkswagen group with 18 percent.

Bloomberg Businessweek reported that Porsche earns $23,000 on every vehicle it sells. It makes more money compared to other Volkswagen Group brands, such as Bentley, Audi and Lamborghini. Bentley has more than $20,000 in profits for every car it sells, while Audi and Lamborghini makes $5,200 per car. The Volkswagen brand made the least money among all other VW Group brands with just $850 in profits for every vehicle. This makes for a 2.9 profit margin.

While VW investors love Porsche, the ambitious goals of its parent company seem to worry them. VW seeks to be the world’s largest auto manufacturer and overtake the current holder of the title—Toyota. With the company eager to be number one in global car sales, it aims to reach a hefty sales goal in 2014, one previously targeted for 2018. As VW Chief Executive Officer Martin Winterkorn mentioned in a press conference in Berlin, the company’s sales will reach 10 million this year.

While Porsche and Audi prove to be profitable, investors are not convinced that making more cars will result in more money for VW.

Photo credit: Jan/ Flickr/ CC BY

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