By William Boston
BERLIN--At Volkswagen AG, the tail is wagging the dog.
Europe's largest automotive group said Thursday that Porsche AG,
the tiny sports-car maker acquired by VW in 2012, churned out
nearly as much profit as the much larger flagship VW brand.
Propelled by Porsche, an otherwise sluggish VW group posted a small
1.5% rise in operating profit to EUR11.7 billion ($16.26
billion).
Although Porsche sold only 155,000 cars last year, dwarfed by
the VW brand's sales of 4.7 million cars, the sports-car maker
reported a 173% surge in operating profit to EUR2.6 billion, making
nearly as high a profit contribution to the group as the VW brand
passenger-car division. Profit at the VW brand unit fell 21% to
EUR2.9 billion.
The role reversal comes in the wake of a bitter seven-year
battle sparked by Porsche's failed attempt to acquire much larger
Volkswagen in a reverse-takeover. It pitted owner cousins Wolfgang
Porsche and Ferdinand Piech against each other. The battle between
the two powerful industrial families related to Ferdinand Porsche,
inventor of the original Volkswagen, ended in 2012 when VW bought
the shares in Porsche it didn't already own for EUR4.46 billion,
which was valued at about $5.6 billion at the time.
The contrast between Porsche's turbocharged performance and VW's
sputtering mass-market results is emblematic of the unequal
recovery of the world's major economies. From Boston to Beijing
makers of premium car brands are benefiting from a recovery in
demand among the well-heeled while mass-market manufacturers are
struggling as demand from families and low-wage earners lags.
Europe, where VW still does most of its business, is gradually
emerging from a six-year slump. Car sales there are expected to
rise 2% to 3% this year, but from levels that are as much as a
quarter below the sales volumes before the financial crisis. Even
as Europe begins to recover, VW warned that new risks abound,
including the uncertain outcome of the Ukraine crisis, a still
fragile global economic recovery and currency risks, especially in
some emerging markets. Exchange-rate swings cut VW sales last year
by EUR4.6 billion, said Hans Dieter Pötsch, VW's chief finance
officer, adding that the currency impact could be about EUR1
billion this year.
"The automotive year 2013 was extremely challenging--especially
for European car makers," said Martin Winterkorn, VW's chief
executive. "In light of the uncertainties our forecast for 2014 is
comparatively cautious."
VW expects sales to grow within a range of 3% next year and
forecast operating profit margins of 5.5% to 6.5%, compared with
5.9% in 2013.
In a separate release highlighting growing luxury-car demand,
especially in China, Bayerische Motoren Werke AG, the Munich-based
premium car maker, said net profit rose 4.5% in 2013 to EUR5.34
billion even as sales slipped 1% to EUR76 billion. BMW sold 1.7
million BMW brand cars last year, up 7.5% from a year earlier.
Despite the hiccups, VW sold more cars last year than General
Motors Co., taking the No. 2 spot in global rankings as it tries to
bump Toyota Motor Corp. from the top spot. VW plans to invest up to
EUR100 billion by 2018 to develop models and technology to boost
sales. Mr. Winterkorn said VW's brands would introduce 100 models
in the next two years as part of a drive to sell over 10 million
vehicles a year by 2018.
"Chances are good that we will exceed the 10 million mark
already this year, four years earlier than originally planned," he
said.
Write to William Boston at william.boston@wsj.com
Corrections & Amplifications An earlier version of this
story incorrectly suggested that Porsche's net income nearly
matched that of the VW brand.
Access Investor Kit for Bayerische Motoren Werke AG
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=DE0005190003
Access Investor Kit for Volkswagen AG
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=DE0007664005
Access Investor Kit for Volkswagen AG
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=DE0007664039
Access Investor Kit for Porsche Automobil Holding SE
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=DE000PAH0038
Access Investor Kit for Porsche Automobil Holding SE
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=US73328P1066
Access Investor Kit for Volkswagen AG
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=US9286623031
Subscribe to WSJ: http://online.wsj.com?mod=djnwires