Porsche 2005 Annual Report Download - page 32

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Porsche Stock
Porsche shares benefited significantly from
the acquisition of a stake in Volkswagen and,
at 831 Euro, reached an interim all-time high.
There was an overall improvement in the mood on the inter-
national stock exchanges during the review year. However,
there were also significant ups and downs during the twelve-
month period. The fact that Porsche stock prices generally
developed well was primarily due to the continued improve-
ment in the company’s earnings situation. In addition, eco-
nomic recovery in the Euro zone and stable economic develop-
ment in the US have encouraged investors. On the other hand,
serious global political uncertainties and soaring oil prices
continued to generate doubt about the future growth of the
global economy.
On the basis of positive forecasts for the economy in the core
Euro zone, the German Stock Market Index (Dax) registered
an increase at the beginning of the 2005/06 fiscal year and
indeed considerably exceeded the 5,000-point mark. Thus,
in Germany, a trend on the Stock Exchange already observed
during the previous year continued. However, when the Ger-
man Stock Market Index went beyond the 6,000-point mark
at the beginning of April, many market participants became
somewhat mistrustful. Sales – triggered by rising oil prices
and anxiety about inflation in the US – pushed the Dax back
down to below 5,300 points. Nevertheless, this reaction was
soon seen to have been disproportionate. The data concerning
economic conditions in Germany and also in important Euro
countries such as France and Italy were accurate. By the end
of the review year, not even an oil price of over 70 Dollars a
barrel could stop the Dax: on July 31, 2006 the Index reached
5,682 points. In the new Porsche 2006/07 fiscal year, the
upward trend continued, and the 6,000-point mark once again
was surpassed.
Despite this favorable development, in global terms a certain
restraint, particularly among private players, was nevertheless
detectable on the capital markets. The reason was increasing
uncertainty about the future world political situation, including
a growing fear of terror and violence. Israel’s military inter-
vention in Lebanon occurred only a few days after the end of
the 2005/06 fiscal year and during the same period in August
2006, the British police succeded at the last minute in averting
a series of planned terrorist attacks on airplanes departing
from the UK to the US.
Despite all geopolitical and economic uncertainties, the rate
of Porsche’s stock rose significantly in the review year. It be-
gan at 649 Euro on August 1, 2005 and had risen to 767 Euro
by July 31, 2006, representing a growth level of 18.2 percent.
The Porsche stock even beat the Dax and left the sectoral in-
dex way behind. While the Dax’s increase over the accounting
period was 16.2 percent, the Automobile Industry Index (CDAX-
Automobile) increased by only 11.1 percent.
Porsche stock’s increase in value particularly reflected investor
approval of the holding in Volkswagen AG. The initial skepticism
shown by financial analysts and investors in the English-speak-
ing world quickly gave way to a widespread consensus that
Porsche, and thus also Porsche stock, would benefit from
secured collaboration with Volkswagen. This realization was
also reflected in the increased rate of Volkswagen’s stock.
Porsche supported this opinion-forming process on the capital
markets by explaining the industrial logic behind collaboration
between the two companies and thus the mutual benefit for
each party. Moreover, from the perspective of many investors,
Porsche distinguished itself from its competitors, as the com-
pany continued to achieve a highly profitable growth rate by
manufacturing premium sports vehicles.
Holding in Volkswagen Fuels Porsche Stock Prices
Porsche stock experienced sharp growth, which set in after the
successful Annual General Meeting and subsequently experien-
ced a brief final spurt toward the end of the business year. The
General Meeting held in Stuttgart at the end of January 2006
not only provided shareholders with detailed figures for the
2004/05 fiscal year, but also presented the strategy behind
Porsche’s investment in Volkswagen. Porsche received consi-
derable praise for its objective of strengthening collaboration
with Volkswagen in important business areas to the benefit of
both companies. A further significant benefit was the appoint-
ment of Dr. Wendelin Wiedeking, President of the Porsche
Executive Board to the Supervisory Board of Volkswagen AG.
This appointment raised the expectations of many analysts
and investors that Dr. Wiedeking would in this capacity be able
to proactively shape the necessary process of change at
Volkswagen. Both these factors sent the Porsche share rate
soaring from a good 600 Euro at the beginning of 2006 to over
800 Euro. On Wednesday, April 26, 2006, Porsche shares
reached an interim all-time high of 831 Euro.
Even Porsche shares were not immune to the general down-
ward trend that set in on the stock exchange worldwide in May.
However, after announcing good business figures in the se-
cond half of June – which forecast new records in sales, turn-
over and profits for the full 2005/06 fiscal year – and present-
ing new model versions, the rate once more reached a level
Kapitalmarkt