Volkswagen traders query plan for CEO to steer Porsche itemizing

By Victoria Waldersee and Ilona Wissenbach

BERLIN/FRANKFURT (Reuters) -Volkswagen traders imagine incoming CEO Oliver Blume will battle to steer each the Volkswagen Group and Porsche – and to drag off a deliberate itemizing of the sports activities automotive maker whereas sporting each hats.

Friday’s announcement that group CEO Herbert Diess would get replaced by Porsche boss Blume has rekindled investor issues about company governance issues at Europe’s prime carmaker, which some shareholders have mentioned weigh on the inventory’s efficiency.

“Blume cannot deal with every thing … this underscores the unhealthy company administration at Wolfsburg,” mentioned Ingo Speich, head of sustainability and company governance at top-20 Volkswagen investor Deka Funding, referring to the German carmaking group’s headquarters.

“It’s poison for the Porsche IPO,” Speich added. Volkswagen plans to record the posh automobiles division within the fourth quarter.

Porsche AG could already must go public at a steep low cost if it decides to go forward with the itemizing as financial obstacles mount, Reuters reported final week.

These issues have been exacerbated by questions over how Blume can handle his twin function.

“Mr Blume will keep his function as CEO (of Porsche AG) together with after a potential IPO,” Volkswagen mentioned on Monday in response to Reuters’ questions.

Diess, meantime, will fulfil his contract that runs till October 2025 however in an advisory capability, an individual conversant in the matter mentioned.

Simply days earlier than his appointment was introduced, Blume and different Porsche AG executives talking at its capital markets day bought a potential itemizing of the sports activities automotive model as a way to provide it extra independence and entrepreneurial freedom whereas elevating funds for the group.

His twin function calls that independence into query, analysts at Stifel and UBS mentioned.

“Such a double mandate can solely exist quickly in an emergency scenario – it will not work in the long run,” mentioned Ulrich Hocker of the German Affiliation for the Safety of Securities (DSW), which represents retail traders.

Nonetheless, most don’t at this stage anticipate a delay to the itemizing. Some, together with automotive trade veteran Ferdinand Dudenhoeffer speculated Porsche finance chief Lutz Meschke could finally take over from Blume on the sports activities automotive model.

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An individual conversant in the matter mentioned it could take a couple extra weeks to see what the administration modifications actually meant for the IPO, including Blume would fill each roles for the foreseeable future.

“We belief Blume with the administration of the Group, however it’s laborious to think about that he’ll be capable to fulfil the twin function of managing the pursuits as CEO of Porsche AG and the Volkswagen Group in the long run,” mentioned Hendrik Schmidt, company governance professional at asset supervisor DWS.

Schmidt mentioned that one cause for what he described as problematic choices was the dearth of unbiased members on Volkswagen’s supervisory board. In keeping with Eikon, DWS owns round 2% of Volkswagen’s choice inventory.

In its assertion on Friday, Volkswagen didn’t define any succession planning for Blume at Porsche.

Volkswagen’s share worth has practically halved since March 2021, underperforming a 17% drop within the STOXX Europe 600 Vehicles & Components Index over the identical interval.

The carmaker solutions to a posh net of traders – its supervisory board managed by employees’ representatives and regional authorities, and a holding firm owned by the Porsche and Piech households, staffed partially with Volkswagen executives.

Porsche AG’s Meschke is on the board of Porsche Automobil Holding SE, Volkswagen’s prime shareholder and proprietor of greater than half its voting rights, whereas Volkswagen’s chairman Hans Dieter Poetsch is its CEO.

Tensions over who pulls the strings in Wolfsburg have spelled the top of the highway for a number of Volkswagen executives earlier than Diess, with former CEO Bernd Pischetsrieder and former VW model chief Wolfgang Bernhard compelled out of their jobs within the late 2000s after repeated clashes with the works council.

Whereas Diess is basically given credit score for Volkswagen’s pivot to electrification – lifting the carmaker from the reputational damage of the Dieselgate scandal to main Europe’s electrical automotive market – the governance points brought on by his confrontational method to management in the end weighed on the funding case, analysts at Stifel Europe Fairness Analysis mentioned.

“Poor company governance makes many traders shrink back,” Janne Werning, who heads ESG Capital Markets & Stewardship at Union Funding, a top-10 shareholder in Volkswagen, mentioned on the carmaker’s annual basic assembly (AGM) final 12 months.

Union Funding, which repeated its criticism of Volkswagen’s governance at the newest AGM in Might, declined to remark for this text.

(Reporting by Victoria Waldersee and Ilona WissenbachAdditional reporting by Emma-Victoria FarrEditing by Christoph Steitz, Matt Scuffham and Mark Potter)

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