Porsche’s new Macan and 911 put a damper on profitability

FRANKFURT: Porsche AG expects weaker returns this year due to the costly rollout of new models and high development spending in a challenging global economy.

Operating margin is set to come in between 15% to 17%, weaker than analyst expectations and below the company’s mid-term goals. Porsche has flagged 2024 as a transition year with a record four new model launches weighing on sales and profit.

The shares erased earlier losses to gain as much as 3.4% in Frankfurt, with analysts citing solid fourth-quarter earnings and strong automotive cash flow.

The company has declined some 23% over the past year.

Porsche has struggled with supply chain issues and declining deliveries in China, where sales slumped last year.

With global EV demand wavering, carmakers have taken a hit as Tesla Inc. and others slash sticker prices and consumers globally are less likely to splurge on big-ticket items.

2024-03-13 16_29_31-Porsche AG enters its biggest year of product launches in a strong position - Po

"Porsche will focus on brand and pricing in future, but to do this, the product range needed to be renewed,” Citigroup analyst Harald Hendrikse said in a note. "This is now happening - but the full impact on pricing and profitability will take time.”

The new lineup, including an upgraded version of the electric taycan unveiled Monday, "will put the wind at our back for years to come,” chief executive officer Oliver Blume, who also helms Porsche parent Volkswagen AG, said Tuesday.

Earnings last year were slightly better than expected and the maker of the 911 is proposing to more than double its dividend to €2.31 per preferred share.

Porsche still sold more than 40,000 Taycans last year, Blume said Monday, presenting the Taycan Turbo GT with prices in Germany starting at €240,000 (RM1.3mil).

According to a Bloomberg Intelligence analysis, the Taycan generated a retail gross margin of $13,088 in January - the highest of any EV.

CEO Blume is seeking to boost Porsche’s luxury credentials with high-spec features to shift higher the company’s valuation, which has started to fall behind leader Ferrari NV.

On Tuesday, the company said it’s building out new sources of revenue from services and exclusive offers. Long-term, the luxury-car maker seeks to lift returns above 20%.

Aside from the upgraded Taycan, the company plans to introduce new versions of the Panamera, the Macan and the 911 this year.
Autos Porsche