Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
Porsche SE plans to write down its Volkswagen shares by up to 40% after uncertainty over possible factory closures and strikes forced Europe’s biggest carmaker to put its annual financial plans on hold.
The Porsche Piëch family’s holding company on Friday wrote down the value of its VW shares by between 7 billion euros and 20 billion euros after a lack of financial data from the company forced it to rely on analyst forecasts. It was announced that this is the outlook.
For the same reason, it was expected to write down its stake in Porsche AG, a partially listed sports car maker, by 1 billion to 2 billion euros in 2022.
Porsche SE added that the book value of both shares “continues to be significantly higher than their respective stock market values.”
As of September, Porsche SE valued its 53.3 percent voting stake in VW at 51.5 billion euros, and its 25 percent voting stake and one share in Porsche AG at 10.5 billion euros.
The expected writedown announcement comes as VW faces a fifth round of negotiations with trade union IG Metall on Monday, amid a standoff with workers over plans to close some factories in Germany and lay off tens of thousands of workers. This took place as preparations were being made to enter into negotiations.
IG Metall and Volkswagen’s powerful works councils are fiercely resisting restructuring plans that management says are necessary due to structural declines in European car sales.
Chief Financial Officer Arno Antlitz warned in September that annual sales of VW’s main brands were about 500,000 lower than before the pandemic.
Recommended
During the same period, the company’s sales share in China, its most profitable market, was almost halved as consumers shifted to electric and hybrid vehicles and increased competition from local competitors such as BYD. .
But worker representatives argue that simply cutting costs won’t address declining sales and accuse management of making poor product decisions.
On Monday, workers at most of Volkswagen’s German factories put down their tools and left work four hours early for the second time in a month. This was twice as long as the previous week’s strike.
IG Metall has warned that the strike will intensify if VW does not abandon its plans to close the plant.
