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Old January 18th, 2002, 06:23 AM   #1
Magic Mtn Dan
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Porsche's Wiedeking says Cayenne will boost profits and sales

Porsche half-yr profit up 10 pct as 911 sales roar

By Alexander Huebner

STUTTGART, Germany, Jan 18 (Reuters) - Porsche AG posted a 10.2 percent rise in six-month pre-tax profit on Friday as demand for its flagship, high-margin 911 carried the German sportscar maker through a slowing economy and flat unit sales.

Porsche said pre-tax profit in the first six months of its fiscal year to January 31 was about 154 million euros ($135.8 million), while sales rose 6.3 percent to 1.83 billion euros. It said it expected full-year profits to match the previous fiscal year.

Its key U.S. market had not suffered long from the effects of the September 11 airliner attacks in New York and Washington, said Porsche Chief Executive Wendelin Wiedeking.

"The light seems to be green again," Wiedeking told the company's annual meeting in the German city of Stuttgart.

Profits rose while unit sales were nearly flat, increasing only 0.7 percent to 23,370 cars.

The company said it sold 10,280 of its entry-level Boxster model, a drop of 13.4 percent on the previous year but sales increased 15.5 percent for the pricier, revamped 911s -- the Porsche of choice for those with deep pockets.

"Demand for both models, particularly the new 911, is strong across the globe," the world's most profitable car maker said in a statement.

SHIFT TO HIGHER MARGIN 911

In its only reaction to a faltering economy which has battered most German and U.S. car makers, Porsche said it would concentrate on selling its higher margin 911s.

"Even if first half sales figures are not matched in the whole year 2001-2002 due to global economic uncertainty, the company expects full year pre-tax profits to be at least at the same level as in the previous year, thanks to a shift to higher value sports cars," it said.

The company has not always weathered global turndowns so well -- its sales plummetted to 4,500 from 11,000 between 1993 and 1994.

This time around, sales have stabilised and the stock rapidly recovered from a 34-month low of 199 euros in the weeks immediately after September 11.

Porsche shares were 2.71 percent up at 455.00 euros by 1106 GMT in low volume trade, compared with a 0.39 percent dip in the Eurostoxx auto index.

"It is one of those safe haven auto stocks," said Hendrik Emrich, an analyst at Berenberg Bank in Hamburg. "I think its a fair price range, I have a range of 400 euros to 450.

"It's already at a premium of roughly 40 percent as far as PER (price-to-earnings ratio) is concerned, but you can't compare Porsche with other car producers because its somewhere between a car manufacturer and a pure luxury goods provider."

In a departure from its luxury sports car niche, Porsche is to launch its new Cayenne sports utility vehicle (SUV) in the autumn, a move Porsche's Wiedeking said would boost profits and sales.

Some observers think Porsche has missed the SUV craze that swept America, where the company sells half of its cars, but its plan to build only 25,000 of them was sufficiently conservative to ensure it sold them all, said Emrich.

The company also hopes Porsche sports car owners might look on the Cayenne as a second car, a more practical runabout than the 911s which cannot carry much more than a golf bag or two.


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