Reported from the source

Quick summary: Porsche AG experienced a disastrous past year, with after-tax profit plummeting by 91.4 percent to 310 million euros. This sharp decline is attributed to a struggling China business, US import tariffs, and a costly strategic reversal in e-mobility. Revenue also decreased by almost a tenth to approximately 36.3 billion euros. The sports car manufacturer has set surprisingly modest profitability targets for 2026, aiming for a return on sales between 5.5 and 7.5 percent. New CEO Michael Leiters plans a comprehensive restructuring to streamline the company and focus on higher-margin product segments.

Porsche AG has concluded a year to forget, with billions in costs for extending combustion engine production largely consuming the company’s profit. After-tax profit fell by 91.4 percent compared to the previous year, reaching 310 million euros, as the MDAX group announced. In 2024, the Stuttgart-based company had still earned almost 3.6 billion euros. Last year, revenue decreased by almost a tenth to approximately 36.3 billion euros. Consequently, the dividend is proposed to fall from 2.31 euros per preferred share to 1.01 euros, and for ordinary shares, Porsche suggests 1.00 euro per share. The profit was burdened by a strategic shift. Already in 2024, strong headwinds had emerged for the Swabians, but last year things got even worse: business in China stalled, US tariffs cost a lot of money, and the company’s electric models were significantly less popular than expected. Former Porsche CEO Oliver Blume, before his departure, revamped the strategy, aiming to boost sales with more combustion engines. This turnaround, however, comes with substantial costs, amounting to approximately 2.4 billion euros for project reconfigurations and write-offs. Porsche had previously invested heavily in electric cars, prioritizing e-models, with combustion engines slated for phase-out. Additionally, plans for building proprietary battery factories with a subsidiary are now being wound down, incurring around 700 million euros. Overall, special costs totaled approximately 3.9 billion euros, with US tariffs accounting for about 700 million euros. In the automotive business, excluding financial services, profit before tax was a mere 90 million euros. A quick recovery is not in sight. Following the profit slump last year, Porsche has set surprisingly low profitability targets for 2026. The return on sales for the operating result in the group is expected to be between 5.5 and 7.5 percent, a figure below the almost eight percent analysts had recently anticipated for the current year. For revenue, management under new CEO Michael Leiters expects 35 to 36 billion euros for the current year. While Porsche anticipates better business for the current year, Leiters’ management team continues to foresee “very challenging market conditions” and geopolitical uncertainties, without accounting for potential impacts from recent developments in the Middle East. Leiters, who succeeded Blume at the beginning of the year, announced plans to comprehensively restructure Porsche, making the company “leaner, faster, and the products even more desirable.” This includes streamlining the leadership structure, reducing hierarchies, and cutting bureaucracy. The company is also considering expanding its product portfolio to grow in higher-margin segments, examining models and derivatives both above its current two-door sports cars and above the Cayenne.

Source: www.tagesschau.de