Porsche: 2024 margin warning, share price falls

(CercleFinance.com) - Porsche warned last night that its operating margin for the 2024 financial year would be at the lower end of the range of its previous estimates of between 14% and 15%.


For the record, the premium carmaker had already revised its annual operating margin target downwards last July, from 15% to 17%, due to problems encountered in the supply of aluminum.

In its press release issued on Thursday evening, the Stuttgart-based group also provided a forecast for its operating margin for 2025, which it sees falling back to a range between 10% and 12%.

Porsche explains that it has implemented a number of measures to improve profitability in the short and medium term, including increased spending on the development of new vehicles, the strengthening of its product range and investment in battery technologies.

According to its estimates, all these elements should weigh on its operating profit and cash flow from automotive activities by around 800 million euros this year.

Porsche, which announced last week that it had entered into discussions to terminate the functions of CFO Lutz Meschke and Sales Director Detlev von Platen, did not provide any information on the progress of these talks.

UBS analysts commented: "We believe that cleaning out the Augias stables and replacing certain senior executives, starting with the CFO (...), is a good opportunity to start afresh and get the business back on track at operational level.

The research firm also welcomes the Group's intention to adapt its strategy by launching new-generation internal combustion engine (ICE) vehicles, in particular for the Cayenne, Panamera and Macan.

'However, this will take time (until 2027 in our opinion) and investments are likely to remain high in the meantime', stresses UBS.

For 2024, Porsche plans to pay a dividend relatively equivalent to that of fiscal 2023.

Following these announcements, Porsche shares fell by almost 6% on the Frankfurt Stock Exchange on Friday, bringing their losses over the last 12 months to over 30%.

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