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UPDATE 1-Volkswagen's cash pile grows ahead of Porsche deal
July 30, 2009 / 8:40 AM / 8 years ago

UPDATE 1-Volkswagen's cash pile grows ahead of Porsche deal

* Automotive net liquidity 12.3 bln eur at end-June * Automotive net cash flow 4.3 bln eur in H1

* Q2 oper profit falls 56 pct to 928 million eur

* Volkswagen ordinaries up 3.9 pct, preferreds down 3.2 pct

(Adds details, background)

FRANKFURT, July 30 (Reuters) - Volkswagen’s (VOWG.DE) cash pile continued to grow since December and second-quarter operating profit easily beat expectations, Europe’s largest carmaker said on Thursday.

“Retaining our ability to act financially has the highest priority,” Chief Financial Officer Hans Dieter Poetsch said in a statement.

Automotive net cash stood at 12.3 billion euros ($17.34 billion) by the end of June, growing by just over half since the end of last year thanks to 4.3 billion euros in free cash flow during the first half.

This leaves Volkswagen with a warchest easily capable of buying sports car maker Porsche AG (PSHG_p.DE).

Last week, Porsche’s two top executives left the company, removing the last big hurdle to a deal that would see Qatar become VW’s third largest shareholder with an estimated 17 percent while eventually bringing the iconic maker of 911 Carreras into the VW group as its tenth brand.

As part of a deal, financial sources have said VW is considering seeking approval from shareholders to issue new non-voting preferred stock (VOWG_p.DE) to help raise enough money that a purchase of Porsche would not threaten VW’s ‘A-’ credit rating.

Operating profit sank 56 percent to 928 million euros, but still exceeded the average estimate of 628 million euros from a Reuters poll of 15 analysts.

Reporting by Christiaan Hetzner

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