FRANKFURT -- Porsche's pretax profit grew by 8.9 percent in the 2004/05 fiscal year to July, the sports car icon said on Wednesday, reporting under IFRS accounting standards for the first time.
The company proposed raising its dividend on preferred shares to 5 euros from 4 euros after earnings before taxes increased to 1.238 billion euros ($1.44 billion) from 1.137 billion a year earlier -- the 11th annual rise in a row.
Net profit climbed 12.9 percent to 779 million euros from 690 million euros in the previous fiscal year.
Earnings per ordinary share increased to 44.68 euros from 39.63 euros, and to 44.74 euros from 39.69 euros for preferred shares.
"The (dividend) payout thus rises by 25.2 percent to 87 million euros," the company said in a statement.
According to a Reuters poll of 16 banks and brokerages, the market had expected on average pretax profit of 1.22 billion euros and a net profit of 710 million euros. The dividend on preferred shares was expected to rise to 4.34 euros.
Forecasts for the results were made difficult by the unquantifiable impact from the changeover to IFRS from HGB, or German GAAP, which was expected to affect research and development costs as well as the booking of provisions.
Porsche did not provide comparison figures for 2003/04 in advance, and analysts said it had merely played down the role of the changeover to profits.
Earnings from the last fiscal year were first restated according to IFRS on Wednesday.
DETAILS TO COME
Analysts had cautioned not to read too much into the figures, however, since the lack of a full profit-and-loss, balance-sheet and cash-flow statement prohibits investors from gaining a sense of Porsche's underlying operational performance.
Detailed results will first emerge on Dec. 7, when the company holds its annual earnings news conference in Stuttgart.
Earnings should be flattered by the changeover to IFRS accounting rules from German HGB, which allowed Porsche greater flexibility in massaging results and understating its true earnings strength through the liberal use of provisioning.
"A lower level of provisioning enforced by IFRS is estimated to boost the pretax margin by around 300 basis points," CSFB wrote in research note to clients.
Moreover, Porsche previously expensed all its research and development costs in the immediate accounting period, but under IFRS must now capitalize some of this expenditure. This should help boost margins as costs are amortized over time.
"One would assume that a lower level of provisioning and r&d capitalization would be earnings enhancing under IFRS versus German GAAP," analysts at WestLB wrote.
Porsche said in September that fiscal 2005 profits would rise when it reported that vehicle sales rose 15 percent to 88,379 units in fiscal 2005. Revenues could not match the gain, however, increasing only 6.8 percent to 6.56 billion euros.
Porsche, whose voting rights are held entirely in the hands of the Porsche and Piech families, said that month that it would use its significant cash pile to acquire almost 20 percent of the voting shares in Volkswagen, the world's fourth-largest carmaker.