Porsche 2005 Annual Report Download - page 22

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res here too. To protect itself from possible infringements of
rights, it conducts research that systematically determines and
evaluates the industrial property rights of third parties.
Dependent Company Report Drawn Up
As mentioned in the report for the previous fiscal year, the struc-
ture of the holders of Porsche AG ordinary shares has changed
in recent years as a result of restructuring of their holdings.
As in the previous year, in accordance with § 312 German
Stock Corporation Act (AktG) Porsche has been recommended
by its legal advisors to draw up a report on relations with com-
panies associated with holders of ordinary shares (a dependent
company report). The conclusions of this report are as follows:
“In accordance with the circumstances known to it when
the legal transactions stated in the report were conducted,
Dr. Ing. h.c. F. Porsche AG has rendered or, as the case may
be, received reasonable payment. There were no measures
calling for submission of a report in accordance with § 312
Paragraph 1 Sentence 2 German Stock Corporation Act (AktG)”.
Outlook
Although the effect of crude oil price increases on demand is
difficult to quantify, expansion of the world economy is likely
to continue and the prospects for 2007 are basically favorable.
The leading economic analysts in Germany expect a growth
rate in the global economy of three percent. The upswing in
the Euro zone could even gain momentum and lend additional
impetus to the global economy.
However, these positive forecasts are based on the assumption
that the oil price will not rise further, but fall to substantially below
the peak levels of 2006. The amount of oil used should be lower
than the amount produced, despite the high level of growth in
China and other emerging countries. The assumption here, how-
ever, is that there will be no serious bottlenecks in production
which – in light of the geopolitical risks in the Middle East and Iran
in particular, and also of the risk of natural catastrophes – may
quickly turn out to be incorrect. The oil price remains one of the
largest risks for the global economy.
The effect of the more restrictive US monetary policy on the de-
velopment of the US economy is still difficult to assess. The more
interest rates rise, the more probable it is that real estate prices
in the USA will have to be adjusted considerably. The price of real
estate has stimulated private consumption in recent years, and
now the opposite effect may be observed. The large deficit in the
balance of payments of the USA remains a risk which could lead
to a noticeable weakening in the US dollar and a continuing rise in
interest rates. A subsequent collapse of the US economy could
also have a major impact on the global economy. Without these
negative effects, the economy of the USA is expected to weaken
just gradually, but retain its upward development on the whole.
Both in Japan and in Europe, the prospects are generally positive
enough to be able to compensate for the effects on the global
economy of any slight cooling off in the USA. If at all, the factors
stimulating growth are only expected to weaken marginally, as
the global economy is growing at a somewhat slower pace and
the monetary policy of the European Central Bank is returning
to a more restrictive course. The development of the Euro ex-
change rate will play a decisive role in the economic prospects
of the Euro zone. If the dollar weakens, especially those com-
panies in Germany that are heavily dependent on exports would
be particularly hard hit. The development of the largest national
economy in the EU hinges on the effect of political decisions,
particularly the increase in VAT that will come into force in
2007. Economic analysts expect that there may be no growth
in demand in the area of private consumption next year.
Despite these economic uncertainties, Porsche is confident about
its corporate prospects for the 2006/07 fiscal year. Its range
of sports cars is the youngest in company history, and the pre-
sentation of the Cayman has boosted the attractiveness of the
Boxster series even further. On the other hand the roadster seg-
ment was recently affected by a major global drop in demand.
Sales of the Cayenne in the first half of the 2006/07 fiscal year
will also suffer from phase-out of the first model generation. How-
ever, in 2007 the sales figures for our sporty all-terrain vehicle
will increase once again with the market launch of the new Cayenne.
In view of the further increase in the size and appeal of its
product range, but also its ongoing penetration of new
markets, particularly in Asia, Porsche aims to achieve unit
sales in the current fiscal year that at least match the high
level of the previous year. We expect the result to remain
at a high level. At the same time it should be noted that the
result of the 2005/06 fiscal year was shaped by special
effects and non-recurring effects. In addition, it is important
to remember that much higher expenses will be incurred in the
2006/07 fiscal year than in the reporting year in connection
with the development of the sport coupe Panamera.
Stuttgart, October 11, 2006
Dr. Ing. h.c. F. Porsche
Aktiengesellschaft
The Executive Board
Management Report