Porsche expects loss of pounds 50m as sales dive

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The Independent Online
STUTTGART (AFX) - Porsche, the German luxury sports car maker, said it expected to show a net loss for the year to July 1993 of DM120m ( pounds 50m) against a loss of DM65.8m the previous year.

Wendelin Wiedeking, chairman, said Porsche sales were expected to drop more than 30 per cent to DM1.7bn-DM1.9bn this year from DM2.68bn last time.

Mr Wiedeking said unit sales were likely to fall to between 15,000 and 17,000 cars, down sharply from last year's 23,000 units.

But he said the company expected to break even in its next financial year to July 1994, despite an unsatisfactory business situation at present.

Mr Wiedeking said the company was trying to improve profitability by cost-cutting. Porsche planned to cut 1,850 jobs by July, reducing its middle management by 31 per cent.

The company confirmed that Ferdinand 'Ferry' Porsche, chairman of its supervisory board, is leaving his post in March. He will be succeeded by Helmut Sihler, the former Henkel chairman. Mr Porsche, who is 83, will remain a member of the board.

Porsche's financial situation has worsened noticeably in the past year. Walter Gnauert, chief financial officer, said group operating profit in the year to last July was only DM35m, after DM60m the previous year.

He said cash flow fell to DM173.8m from DM272.8m in the year to July 1991 and investment declined to DM202m from DM297m. Porsche should be able to cut costs by 30 per cent by 1995, he added.

Some of the turnaround should be generated through producing for other car makers. Already this year, every fifth car manufactured at Porsche factories will be a Mercedes 500E. Porsche is prepared to manufacture cars for other companies at lower costs, Mr Gnauert added.