Strong 2021 Profits Drive Volkswagen’s Porsche Closer to IPO

A boost in group operating profits for Volkswagen AG is likely to be the catalyst that drives a fourth-quarter initial public offering (IPO) for its profitable high-performance sports car division Porsche, Bloomberg reported on Tuesday (March 15).

Volkswagen posted group operating profit for 2021 of 19.28 billion euros (roughly $21 billion), up from 9.68 billion euros the previous year, with Porsche contributing profits of 5.01 billion euros and Audi adding 5.55 billion euros.

Group revenue in South America increased to 11.04 billion euros in 2021 from 8.63 billion euros in 2020 and in North America, group revenue hit 45.31 billion euros, from 36.81 billion euros, according to a press release on Tuesday (March 15) regarding the firm’s annual report. Porsche reported an operating margin of 16.5% last year, up from 15.4%.

See also: VW Puts Porsche on the Road to IPO

Europe’s largest automaker anticipates going forward with an IPO despite adverse market conditions. Analysts estimated that Porsche could be valued as much as $102 billion in an IPO, versus parent company Volkswagen’s $131 billion valuation, PYMNTS reported last month.

VW expects somewhat higher sales for passenger cars on the global level, but deliveries will remain problematic, with inventory below pre-pandemic levels. Shortages of semiconductors and commodities are expected to lessen, according to its annual report.

Russia’s invasion of Ukraine will also continue to have an impact, having already forced VW to temporarily close manufacturing plants. Russia is also a key exporter of numerous inputs, including nickel, palladium and steel.

“The war in the Ukraine is dramatic and causes human tragedy and economic upheaval that we thought we had overcome throughout years of multilateralism and diplomacy,” CEO Herbert Diess said at Volkswagen‘s annual earnings press conference in Wolfsburg.

“Volkswagen has proven its resilience over the past years and will manage this crisis, too. At the same time, we will keep clear focus on implementation of our NEW AUTO strategy, which will enable us for an emission-free, autonomous future of mobility,” Diess said.