With weak sales in China, Porsche has worst result since IPO

The profit from porsche plummeted in the first quarter, for the weakest result since the stock market listing in September 2022, with model changes and weak demand in China weighing on the manufacturer’s prospects.

Operating profit fell 30% to €1.28 billion ($1.4 billion), Volkswagen said on Friday (26), with consumers in China increasing difficulties in getting vehicles through customs in the US. Porsche has marked the start of the year as a likely low point as the 911 maker works on launching four refreshed models.

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Although order books are nearly full for the year, new vehicles such as the electric Macan and 911 will weigh on production and returns in the coming months, Chief Financial Officer Lutz Meschke said on a conference call with the media. There should be a “strong acceleration” in profit to 2025, he said.

Returns in the three months through March fell to 14.2%, below the automaker’s annual guidance and below analysts’ expectations. The Zuffenhausen, Germany-based company still maintained its full-year guidance, including expected group revenues of up to 42 billion euros.

In addition to spending on development of the new models, Porsche has made significant investments in automotive technology and driver experience, the company said. Looking ahead, the brand expects profits and profitability to normalize in a range of 17% to 19% in 2025, Meschke said.

While luxury carmakers like Porsche are better protected from downturns, demand has fallen in China, where consumers face a housing crisis and a weaker economy. The CFO said he expects “some” recovery in China during the second half of the year.

First-quarter deliveries in Porsche’s biggest market fell 24% to 16,340 vehicles, with China accounting for just over a fifth of total sales.

“We need to see more evidence of management’s control over the processes it can control and of some stabilization of its position in China,” Bernstein analyst Stephen Reitman said in a note ahead of the earnings release.

Meschke participated this week at the Beijing Motor Show, where the latest technological advances from local players such as BYD Co., China’s electric vehicle leader, were showcased.

“It’s quite impressive what local Chinese brands are doing when it comes to electrification,” said Meschke. “The efforts of local Chinese brands are enormous – we must closely monitor the situation as European players.”