Porsche slashes its dividend after posting a massive pretax loss

After posting a huge pretax loss, Porsche Automobile Holding SE dramatically cut its dividend, marred by writedowns on stock options for heavily inflated Volkswagen shares. Porsche SE recorded a 4.4 billion euro ($6.60 billion) loss before tax. This confirmed a profit warning it issued just days before its 2008/09 fiscal year ended on July 31.

In the previous year, its cash-settled VW stock options gave Porsche windfall gains of 8.57 billion euros.

Porsche SE then submitted a proposal for a symbolic dividend of 0.05 euros per preferred share that it will distribute after taking 1 billion euros from earnings retained in the past to post a small 8.2 million euro net profit based on German accounting standards.

In a statement from Porsche SE, the main factor in the loss was a write-down on cash settlement options to VW shares.

Another factor influencing the result was the “hidden reserves and liabilities” recognized in the course of the purchase price allocation for the shareholding in VW.