Porsche (P911.DE) reported downbeat results for the first nine months of the year, after recognizing charges it took last quarter as it realigned its product strategy in changing environments both in the US and China.
Porsche reported sales revenue for the first three quarters of the year of 26.86 billion euros ($31.22 billion), down 6% compared to a year ago. Operating profit came in at just 40 million euros ($46.50), down 99% compared to a eyar ago, with Porsche’s operating return on sales (ROS), a measure of margin, dropping to 0.2% from 14.1%.
“This result fell clearly short of our expectations,” said Dr. Jochen Breckner, member of Porsche’s executive board for finance and IT, during its results presentation today.
For the year, Porsche now projects global sales revenue of 37 to 38 billion euros (prior 40.1 billion euros), with turn on sales coming in to “slightly positive to 2%.”
Last month Porsche said adjustments to the powertrain strategy for a new three-row SUV and extending current models such as the Panamera and the Cayenne with gas-powered engines through the 2030s will lead to a hit to hits profitability.
Porsche said it expects the lineup changes as well as other costs to come in around 3.2 billion euros ($3.72 billion) this year, with as much as 1.8 billion euros ($2.09 billion) for adjustments to its new EV platform. Porsche said its tariff for the year thus far war sound 500 million euros ($581.3 million). The EU including Germany signed a 15% tariff deal earlier this summer, with exports coming in starting August 1st tariffed at the new rate.
Breckner projected that the full year tariff hit could be around 700 million euros ($813.67 million).
In terms of forward guidance, Porsche now projects an return of sale of up to 2% this year, down from the prior 5%. Its automotive EBITDA (earnings before interest, taxes, depreciation and amortization) margin is now seen at between 10.5% and 12.5%, down from a prior 14.5% to 16.5%.
In terms of important territories, Porsche said the small decline in North America reflected temporarily lower imports after the summer break following high inventory levels at the end of Q2. Porsche said China continues to reflect the “challenging market conditions primarily in the luxury segment with focus on value-oriented sales in this region.” Porsche is cutting its dealerships, employees, and other stakeholders in its China business to bring costs down.
Porsche CEO and VW CEO Oliver Blume will step down from his role as Porsche’s CEO, with former McLaren chief exec Michael Leiters taking his place starting January 1 of next year.
