BERLIN – Porsche SE, the largest shareholder of Volkswagen, may write down the value of its stake in the company by up to 20 billion euros ($21 billion), citing a tough market environment and increasing uncertainties. The move is a blow to investor confidence in VW, which is grappling with high costs, intense Asian competition, and a drawn-out conflict with powerful unions over plant closures and wage cuts.
Porsche SE, which owns 31.9% of Volkswagen’s equity and 53.3% of its voting rights, said it expects to write down the value of its stake by 7 billion to 20 billion euros, affecting its group result after tax in 2024.
The company also announced it expects an impairment of 1 billion to 2 billion euros on its 12.5% stake in Porsche AG. In addition, it forecasts that its group result after tax in 2024 will be “significantly negative” and will likely cut its dividend payout for the financial year.
Unions are pushing for deeper dividend cuts to reduce costs, but Volkswagen’s management remains committed to a payout ratio of at least 30% of earnings after tax. Analysts warn that the combination of pricing pressure, lower dividends from China joint ventures, and committed investments may leave Volkswagen with close to zero free cash flow in the coming years, exacerbating concerns about Porsche SE’s financial stability.
In a statement, Porsche SE cited a “market environment with further increasing uncertainties, lower demand than originally expected on various markets and increasing geopolitical tensions and protectionist tendencies” as reasons for the expected impairments.
The company’s chairman may write down the value of its stake in VW on Friday, marking another tough day for the struggling European carmaker.
