Porsche 2003 Annual Report Download - page 29

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Porsche stock outperforms its category
During the year under review we observed greater optimism
in the financial markets, although the rocketing stock prices
of the New Economy boom remained a distant memory. Never-
theless, the German Stock Market Index (DAX) showed a
positive trend for extended periods of the Porsche 2003/04
fiscal year, staging a welcome recovery from the lows of the
previous year. Both the general upturn in the world economy
and the cost reduction programs of recent years assisted in
this considerable recovery in profitability in both the industrial
and the financial sectors, leading to higher stock market
valuations for the companies concerned.
However, players in the capital markets have generally become
more cautious as the growing number of terrorist attacks
introduces uncertainty to the international political situation.
In Europe, the Madrid bombings in spring 2004 created re-
newed uncertainty. Over a year after the military intervention
in Iraq, the country is still experiencing major unrest, a situa-
tion which is responsible in many ways for the tension running
just below the surface of the stock markets. There are other
aggravating factors, such as the oil price rises that have de-
pressed the markets since the summer of 2004. The overall
business environment during the review year did not inspire
a great deal of optimism in the stock markets.
Porsche Stock Outperforms Related Sectors
Despite this situation the Porsche stock performed better
than other, similar stocks during 2003/04. Not only did it
surge in value compared with the previous year; but in fact
reached record highs from time to time. The peak in the
review year was reached on June 23, 2004 with an all-time
high share price of EUR 584. The previous best price had
been EUR 542 in March 2002. The stock started the year on
1 August, 2003 at EUR 359.2; by the end of July 2004 it
had reached EUR 537 – an increase of 49.5 percent. Both
the DAX (+13.3 percent) and the automotive industry share
index (+16.5 percent) were noticeably weaker. Porsche stock
outperformed the competition primarily because of a clear,
brand-focused growth strategy that has helped the group
break one record after another.
Business Trend boosts Stock Price Performance
The healthy business figures posted during the year under
review had a positive affect on the Porsche stock. The first
distinct upward movement happened in September 2003,
around the time that the preliminary 2002/03 results were
announced. This trend gained momentum over the following
months as a result of events such as our announcement of
record results on 12 November. The stock price went up yet
again after we provided further details of the group’s 2002/03
performance at our Financial Press Conference on 3 Decem-
ber, 2003. We noticed a similar surge around the time of
the Annual General Meeting on 23 January, 2004, when the
stock price approached the 500 Euro mark. The stock really
began to take off in spring 2004 and continued hitting record
highs through to the end of June, supported by the healthy
operating results announced by the Porsche Group both in a
letter to stockholders at the end of the first half-year and in
a subsequent interim report.
During the review year, share performance also benefited
from Porsche’s regular market briefings that provided finance
market participants with insights into our strategy and philo-
sophy. Investor communication included the staging of road-
shows at major financial centers both at home and abroad, and
regular meetings with investors and analysts at our Zuffen-
hausen headquarters. These activities generated a high level
of investor commitment to our stock. A number of analysts
upgraded their forecasts for Porsche stock – up to EUR 800
in one instance. This was in recognition of the Cayenne’s
market success during its first 12 months and also of the fact
that sales of 911 models were holding up well, despite their
imminent replacement.
Porsche Stock 2003 ⁄ 04
During the review year the
Porsche stock was quoted at
a previously unattained level
of 584 Euro.