High investments from Porsche AG made a record low of the shares of the sports car manufacturer on Friday.
In view of the disappointing demand, the sports car manufacturer Porsche moves away from its previous strategy worldwide and now wants to initiate the turn with considerable financial effort. Porsche wants to offer more sports cars with combustion and plug-in hybrid engines again. In view of the demand for these drive variants, market observers had expected this, but Porsche needs more money than expected for the strategy chew. In addition, the financial forecast for this year is weaker than feared.
The shareholders from the group environment of Porsche AG were also unable to clear themselves from the news from Zuffenhausen on Friday. After the Volkswagen (Volkswagen (VW) VZ) Group Holding Porsche (Porsche Automobil VZ) then announced higher depreciation on the book values of the core participations, their shares recently fell by one percent.
The Volkswagen title came under a little less pressure at 0.6 percent. In the beginning they had followed the relaxing industry environment, but this support was lost. The Sector Index Stoxx Europe 600 Automobiles & Parts recently slipped into the minus at 0.7 percent. Porsche AG shaped the picture here as the biggest loser.
The sports car manufacturer wants to put a lot of money into the model range and thus defend himself against the crisis. However, this clouds the outlook, which, according to dealers, is significantly below expectations. Porsche 2025 sees sales at 39 to 40 billion euros and the operational return on sales at 10 to 12 percent. CEO Oliver Blume therefore accepts a significant absorbing of the operational margin, but the dividend should remain stable.
In a first reaction, JPMorgan analyst Jose Asumendi spoke of a correct step to make necessary investments in the drive train strategy. These should enable the car manufacturer to return to the growth path in the next 24 months. Philippe Houchois from Jefferies emphasized the need to improve the investment background again.
The Goldman-Sachs analyst George Galliers wrote the decided expansion of the model portfolio in 2025. According to Daniel Schwarz from the investment bank Stifel, such adjustments will take some time before this is reflected in the results.
In a first reaction, the UBS analyst Patrick Hummel spoke that the extent of this “profit warning” was very clear compared to the previous expectations. The average analyst estimates for the profit per share could then decrease by 25 percent, he mentioned. Michael Punzet from DZ Bank wrote that the story as a resistant, highly profitable luxury brand gets cracks.
Investors have not enjoyed Porsche AG for some time. The record rally after the IPO in September 2022 lasted only a few months – until the record high at 120.80 euros in May 2023. After that, the trend went down steadily, currently the shareholders are less than half as at the best of times. The course is now a good third below the issue price of 82.50 euros.
The Porsche AG share temporarily dropped by almost 6.42 percent to 56.00 euros at the time of the week and noted at the lowest level since the IPO 2022. Analysts rate the strategy chew as positive. However, it will take some time before the measures should actually have an impact.
Porsche adapt to the “new normality” in which combustion models played a larger role, according to Deutsche Bank. The announced additional expenses of over 800 million euros would be higher than expected and primarily flow into the combustion engines. The production of the Taycan electric car could now be deducted from Stuttgart so that there is enough space for possible special models.
Turnaround no question from just a few quarters
At UBS, analysts assume that there will be new versions of the Cayenne, Panamera and Macan models with the latest combustion technology. However, this should take – with persistently high investments – until 2027. Therefore, a reversal of the negative trend of results is not a question of just a few quarters. According to the evening evening, Porsche expects an EBIT margin of 10 to 12 percent in 2025. The consensus estimate of analysts has so far been 14 percent.
For the Stuttgart sports car manufacturer, which has a return claim of well over 15 percent operative margin, the announcement is a bitter setback. Almost a year ago, CFO Lutz Meschke announced that Porsche would like to continue to achieve a return of 17 to 19 percent in the medium term. “And in the long term we continue to strive for operational group sales return of more than 20 percent,” said Meschke at the time.
As announced recently, the manager will leave the company together with sales director Detlev from Platen. The exchange of the board members is an opportunity for a restart, the UBS says to get the company up again.
Dow Jones / Frankfurt (dpa-AfX)
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