When we interviewed Holger Härter, the CFO of sports car maker Porsche, back in 2002, he described the restructuring and centralisation of treasury operations a "vital milestone" for the company, ultimately turning its treasury function into a profit centre. If anyone dismissed this as a mere back-office reorganisation back then, they aren't today.
Yesterday, Porsche reported its latest annual results—for the 12 months through July—with the headline being pre-tax profits of €5.9 billion, up from €2.1 billion the year before. Earnings from stock option trades, the company said, accounted for a whopping €3.6 billion of its profits, more than three times the amount made on selling cars. This led the Financial Times to suggest that the firm was behaving more like a hedge fund than an automaker, to which a company spokesman pithily replied, "Hedge funds don't make cars the last time I checked."
The options are thought to be bets on a rise in the price of Volkswagen, in which Porsche has built a sizeable stake over the past two years. This proved a winning strategy, given the sharp increase in VW's share price during this period.
Härter's streamlined treasury has also racked up notable success predicting foreign exchange trends. When the CFO spoke with us about revamping the company's hedging strategy to insulate it against potential US dollar weakness, the greenback was at parity with the euro.
Few expect the company's derivatives-trading success to continue, especially given the current state of financial markets. But the fiercely independent, often idiosyncratic firm continues to charts its own course, and it's dangerous to bet against Härter and his team weathering the credit turmoil better than others. As he told us, "We learned the hard way that banks are there for you when you don't need them, and when you do need them, they're nowhere to be seen."
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