Porsche makes a further €6.84bn on VW options

Porsche has made a further €6.84 billion from its holdings of cash-settled options on shares of its rival German car maker Volkswagen (VW).

These profits were recorded in Porsche’s first-half fiscal year 2008/09 results (from August 2008 to January 2009), which were announced today. They contributed to a pre-tax profit for the period of €7.34 billion, compared with €1.66 billion over the same time frame the previous year.

The car firm made €6.83 billion gain on these options for the business year 2007/08, which was a large part of the €8.6 billion overall profit of Porsche Group for the year.

Over the past few years, Porsche has been steadily increasing its stake in VW with the view to a potential takeover. The company describes the cash-settled options as hedges on further acquisition of these shares, though some commentators have viewed the strategy as partly speculative.

Last October, Porsche revealed it had much more of these options than the market knew about (because German regulations do not require disclosure of cash-settled options positions) causing a big jump in VW’s share price, which resulted in large losses for short sellers of the stock.

See also: The Volkswagen squeeze
German regulator investigates Volkswagen shares manipulation

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