[BERLIN] Porsche said on Wednesday (Mar 12) that its extensive restructuring, as well as trade tensions and intensifying competition in China, will weigh on 2025 earnings, even before accounting for possible higher US tariffs on EU imports.
The luxury carmaker, whose shares dropped sharply last month when it warned its margin this year would hit just 10 to 12 per cent because of investments in new internal combustion engine and hybrid models, is in the midst of a cost-cutting drive, shrinking its workforce by just under 4,000 jobs and planning further cuts.
Its margin forecast, based on expected sales revenue roughly equal to 2024 at 39 billion to 40 billion euros, does not factor in new tariffs that Donald Trump may impose on car imports from Europe, a move that threatens to undermine Porsche’s sales in its biggest single-country market.
‘Persistently challenging’
Porsche, which at its stock market debut in 2022 was valued higher than its parent company Volkswagen, has fallen from grace since, struggling in particular with low sales in China, where sales dropped 28 per cent in 2024.
Still, the luxury carmaker will keep its dividend for 2024 at the previous year’s level despite a 30.4 per cent drop in net profit, according to Reuters calculations.
Like Volkswagen, which warned on Tuesday that margins would remain flat in 2025 as it battles to reduce costs, Porsche is also downsizing in an attempt to boost profitability towards its long-term target of 20 per cent.
But in the meantime, it pared back its medium-term margin target to 15 to 17 per cent from 17 to 19 per cent, citing a “persistently challenging environment”.
Porsche’s operating profits fell 22.6 per cent last year to 5.6 billion euros, yielding a return on sales of 14.1 per cent despite revenue remaining roughly on the previous year’s level, as renewing five out of six of its model lines weighed on earnings.
With EV demand lagging, the carmaker promised to offer a range of combustion engine, hybrid or electric models “well into the 2030s” and was evaluating the launch of a new SUV model line with combustion and hybrid options towards the end of the decade. REUTERS
