The 911 maker’s profit margin will slump to as low as 10% this year, a far cry from the 20% level management floated before a blockbuster initial public offering two years ago.
Porsche’s stock slumped today to a new low since the listing, dropping the company’s market value to less than half its May 2023 peak.
The “sharp deterioration” in outlook is a “major concern,” Bernstein analyst Stephen Reitman said in a note.
He urged Porsche executives to convene a call with investors “to further explain and reassure an inevitably febrile market”.
Porsche shares plunged as much as 8% shortly after the open in Frankfurt before paring declines. They’ve fallen more than 30% in the past 12 months.
Porsche was among the major automakers to pull back from transitioning to electric vehicles (EVs) last year, citing underwhelming demand.
Challenges with making the jump to EVs have cost the company dearly in China, where deliveries have dropped.
Porsche disclosed this past weekend that it may oust both its CFO and sales chief.
Porsche said late yesterday that it will take an €800 million (US$831 million) hit this year tied to expanding its product portfolio with more combustion engine and plug-in hybrid models.
While the company’s all-electric Taycan got off to a fast start following its 2020 debut, sales stumbled last year, and a new EV version of the Macan sport utility vehicle has underwhelmed.
Return on sales for 2024 is expected to end up at the lower end of its forecast range, or around 14%.
This projection was already lowered back in July, with executives blaming supply chain snags.
“Porsche is a luxury brand OEM and is not generating profitability in line with that,” Citigroup Inc. analyst Harald Hendrikse said in a note.
“The €800 million hit doesn’t fully account for Porsche’s shortfall, suggesting some execution gaps,” Hendrikse said
In a knock-on effect of Porsche’s disappointing outlook, the holding company majority owned by the billionaire Porsche-Piëch family said late yesterday that it now expects to book an even bigger impairment on the carrying value of its investment in the carmaker.
Porsche Automobil Holding SE said the impairment could be in the €2.5 billion to €3.5 billion range.
That’s a bigger setback than the €1 billion to €2 billion hit the holding company was cautioning in December.
What Bloomberg Intelligence (BI) says
BI automotive analyst Michael Dean said family holding company Porsche SE’s raising of its Volkswagen AG (VW) and Porsche AG stake writedowns to up to €23.5 billion, following Porsche AG’s weak outlook won’t have a cash impact and shouldn’t affect the pass-through of dividends from the holdings.
A 31.9% capital stake in VW had a €52 billion book value (€15.5 billion market value) and the 12.5% Porsche AG stake was valued at €10 billion (vs. €7 billion) at H1 2024.
In addition to expenses tied to rolling out more gasoline and hybrid models, Porsche blamed the lower forecast for this year on efforts to bolster its car-customisation offerings and increasing investments in battery subsidiaries.
Porsche’s supervisory board announced an intention over the weekend to oust long-serving CFO Lutz Meschke and sales head Detlev von Platen.
German media outlets have speculated that CEO Oliver Blume may also have to relinquish his position at the top of Porsche, ending his dual role to focus on leading VW.