Restructuring rumors

Speaking at VW's annual general meeting in Hamburg on Thursday, chief executive Martin Winterkorn said "I'm certain that we can and will advance our partnership in the difficult current year 2009."

Winterkorn said the two companies together "have the stuff to develop the powerhouse of the international automobile industry," but did not provide any further details.

His remarks came as The Financial Times newspaper reported that Porsche SE, the luxury brand's holding company, was looking to sell its manufacturing arm to VW in exchange for cash and shares.

Further reports from Bloomberg news agency quoted unnamed sources as saying the deal would help Porsche SE raise the funds it needs to continue its push to gain full control of VW, which, as Europe's biggest carmaker, has a turnover roughly 15 times larger than Porsche's.

Porsche SE already owns 51 percent of VW, but analysts say the 9 billion euros of debt it has accumulated buying shares so far is making it difficult for Porsche to acquire its target stake of 75 percent.

The Stuttgart-based sports carmaker recently renewed a credit line worth 10 billion euros, but tighter lending conditions caused by the global financial crisis left its managers short of the 12.5 billion they had initially sought.

Representatives of both VW and Porsche SE declined to comment on the media reports.

However, the president of Porsche's works council, Uwe Hueck, criticized the media for suggesting the company was in financial difficulty and that VW was considering the stake.

"I'm angry that particular persons in the media are spreading ideas that haven't been discussed by the supervisory board," Hueck said in a written statement.

He said that the reports were irresponsible and threatened to spread fear among Porsche workers.

"The jobs at our company are secure," Hueck said, adding that Porsche remained financially sound and profitable despite difficulties linked to the global economic downturn.

Meanwhile, ahead of Thursday's shareholder meeting, VW reported what it described as "extremely weak" results for the first three months of this year with earnings slumping over the last three-quarters.

The Wolfsburg-based company's net profit tumbled to 243 million euros in the first quarter of 2009 -- down 74 percent from the same period last year.