Porsche, VW Lower 2025 Forecasts Because of Pullback From EVs
Porsche Now Predicts an Operating Return on Sales of No More Than 2%; Volkswagen's Estimate Is 2%-3%
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Porsche AG and its parent Volkswagen AG cut their outlook for the year, citing the sports-car maker taking a 1.8 billion euro ($2.2 billion) hit to operating profit linked to pushing back the introduction of new electric vehicles.
Porsche now forecasts an operating return on sales of no more than 2%, down from a previous range of 5% to 7%, for 2025. It’s the fourth time the 911 maker has lowered guidance this year. The American depositary receipts fell 6.4%.
The company announced a number of delays to its EV plans. Among them, a new range of sport utility vehicles positioned above the Cayenne that was going to be exclusively electric will instead be available only with combustion-engine and hybrid powertrains.
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The moves come as the European auto industry struggles with a slowdown in EV sales, after carmakers poured billions of dollars into investments in the new drivetrains. Porsche has struggled to live up to expectations since its blockbuster 2022 listing, with a slowdown in China and U.S. tariffs also taking a toll. The share price has fallen so low that the company is dropping out of the DAX, Germany’s benchmark index.
After replacing several executives, Porsche is trying to recover by adding more combustion-engine and plug-in hybrid models and slashing costs, including through job cuts. It also ditched a plan to produce its own batteries due to weak electric vehicle demand.
As a result of Porsche’s moves to realign its product plans, parent company Volkswagen also lowered its forecast for operating return on sales this year to 2% to 3%, down from as much as 5%. The company said it will take a roughly 3 billion euro noncash impairment related to Porsche’s moves. VW’s U.S. shares were down 4.5%.
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Porsche also trimmed its medium-term margin target to as much as 15% from an upper end of 17% previously.
Oliver Blume, who is CEO of both companies, is under pressure from investors to relinquish the Porsche role and allow someone else to turn the brand around. The search for a new leader has begun, Bloomberg News reported last month, with the Porsche-Piëch owner family holding discussions with potential candidates.
Blume’s double role has been a source of concern for investors given that Volkswagen is also grappling with similar problems and is undergoing a major restructuring.
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