«Porsche will have greater autonomy after a possible Ipo»
Lutz Meschke: «Our aim is to attract a well-diversified and strong shareholder base with the Ipo. Retail placement is a very important issue»
di Isabella Bufacchi
6' di lettura
How important is the Italian market for Porsche and in particular how important is the participation of Italian investors, retail and institutional, in the IPO?
Italy has always been a very important market for Porsche. We sell more than 6,000 cars per year in Italy and have a strong fan-base here. Our Italian customers are very enthusiastic of our brand. This is the reason why we decided to set up a Porsche Experience Center in Italy to give our customers and fans the possibility to experience our cars in detail. The PEC Franciacorta opened recently. This underlines the importance of the Italian market for Porsche in general. As for the Italian investors in our IPO, we will know more in a couple of weeks.
Are you running the risk of disappointing the retail base as there are rumours in Germany that there won't be enough preferred shares for smaller investors?
We are aiming for a very well balanced investor base in the IPO- this is important for us. Our aim is to attract a well-diversified and strong shareholder base with the IPO. Retail placement is a very important issue. We have banks taking care of the retail business in Germany, Italy, France, Spain, Austria and Switzerland.
Have you tested the market so far for pricing: are you aiming at 80bn evaluation? How is the market responding to the IPO?
And there is a focus on Porsche on the capital markets. The discussions with investors are going very well. We appreciate the high interest shown in our company .and we are optimistic in spite of difficult market conditions. . We want to have the IPO ready by the end of September, beginning of October. The sooner, the better.
Porsche has clear financial targets: you expect growing revenues at €38-39 bn in 2022, a new company record year. And you target your EBIDTA margin to increase in the coming years to a range of 25 and 27%, return on sales up 20% in the long-term. But a recession is looming, inflation is at record levels, people are scared and worried by the war in Ukraine, Pandemic waves, energy blackouts. Why should investors get exposed now to a Porsche risk? Is Porsche a low risk investment?
Porsche has a robust business model. We have a track record of good resilience to crises - for example to the 2008 crisis or to the Pandemic. Prior to the financial crisis, we sold less than 100,000 cars, primarily in the US and Europe. China was not so important at that point in time. In 2020 we achieved an operating margin of almost 15% and a strong net cash flow. This shows that Porsche has the potential to be successful in times of crisis. In the first half of this year we were faced with overlapping crises – severe Corona pandemic in China, supply chains problems on semiconductors and wire harnesses due to, the war in Ukraine – and we still managed to increase our profitability and cash flow despite of a slight decrease in our sales volume. This confirms our strong customer base. And after the crises with the Panamera, the Macan and the fully electric Taycan we have set up a successful model lineup. Porsche has been successful in times of crises. And I am confident that Porsche is well positioned to be successful in the future, too.
What do you mean when you say “successful”. What is a successful IPO for you?
It is important for Porsche to unleash its full potential in the future. The IPO will help significantly to achieve this. We have agreed to enter in an industrial cooperation and a relationship agreement with the Volkswagen Group. These contracts will define how the relationship will look like after the IPO. hence Porsche will have greater autonomy after a possible IPO.The Porsche Board of Management will be in a position to make decisions without any authority for the Volkswagen Group to issue instructions. It is also important from an investor’s point of view that Porsche’s fate is in the hands of the Porsche Board of Management. We believe that this will unleash further potential for our company. In parallel, there still is the full flexibility to further cooperate with VW brands into fields that are beneficial for Porsche. It makes sense to keep on sharing technologies like e. g. the Taycan platform or production plants. The transformation of the car industry imposed by electric cars and e-mobility is a new industrial revolution.
How is Porsche positioned in the electric luxury car market: is the success of Taycan a starting point? And how are you going to finance this transformation?
Eight years ago we decided to go clearly in the direction of e-mobility. In a very strict way, as the expectations of the younger generation changed regarding sustainability aspects and CO2 legislation is going to be a very rigid one in the future. For a sports car manufacturer like us it was crystal clear that we had to react quickly. We had to be fast, in order to get a decent share of the new market. So we decided in a very early phase to develop the Taycan: it is 100% Porsche - in its design, its performance and also in its sustainability. We were able to define the word “modern luxury” anew: by this I mean a luxury product with a value driven approach, a product for the new generations that takes on the responsibility for the environment and society: such as social programmes, educational programmes and sponsoring programmes for youth sports. This is an important mix for the future of luxury products. It is not sufficient to invest in a car, in a product. The product must respect the environment, the society. We want to go beyond the car as a product. We look at customers behaviour, as well as into convenience for the charging infrastructure. This is why we have very ambitious CO2 goals: We are working towards a net carbon neutral value chain in 2030. This includes a net carbon neutral use phase for future BEVs.
The IPO is not going to give Porsche any money to invest in the future: the VW group is counting on the 10bn from the IPO to finance batteries and its electric car new investments. What about your investments?
We are in a very strong position if it comes to cash. We had a net cash flow margin around 12% in 2021. The target for the mid-term s even higher, approximately in a range from 12.5% to 14%. With our cash flow generation capabilities, we are confident that we can finance future investment requirements. We intend to target a dividend payout ratio of 50 percent of the Porsche Group’s IFRS consolidated profit after tax attributable to its shareholders in the mid-term.We are also in a very good position in digitalisation and BEV-transition because we started early, and so we already invested much into this field in recent years in production plants, tools, equipments...In the coming years, we will benefit enormously by scale. We aim to further increase our profitability margin and cash flows.
You expect your customer base HNWI to grow over 100 million by 2026. Moreover you see a growing base of potential customers in millennials and growing share of women: can you explain? Are more women buying Porsche cars?
In China 50% of our customers are female. And the average age of our customers there is about 35 years. This is completely different compared to Europe where the average age is about 50 years and more. The millennials are very important in our customer base. And this changes the expectations of our customers. Digitalisation and connectivity are becoming increasingly important. As for the HNWI, they are expected to grow over 100 million by 2026, this is a significant growth rate worldwide in the next 5 years. This is why we expect to sell more Luxury SUVs and luxury cars as a whole. This is an enormous additional potential if it comes to pricing and product mix with our strong brand.