Porsche said it will keep its dividend for 2024 at the previous year’s level despite a 30.4 per cent drop in net profit, according to Reuters calculations, as the luxury carmaker battles high costs and intense competition in China.
Citing a “persistently challenging environment”, the company also pared back its medium-term margin target to 15-17 per cent from 17-19 per cent.
Porsche’s shares suffered their worst day on the stock market since its 2022 listing last month when it warned that its 2025 margin would hit just 10-12 per cent this year because of an €800 million dent to profits as it pivoted back to more combustion engine and hybrid models.
It has warned that lower sales, high costs and trade concerns would hurt 2025 earnings, even before a possible hike in US tariffs on EU imports, making it the biggest percentage decliner on Europe’s benchmark stock index.
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The carmaker was assessing how to pass on to consumers the likely surge in US tariffs on European imports to 25 per cent – from 2.5 per cent now – without pressuring margins, implying vehicle prices may be raised to offset any drop in unit sales.
The US is Porsche’s biggest market, making up 25 per cent of unit sales in 2024, but like Volkswagen’s Audi, it has no US manufacturing base and imports its cars from abroad.
“For now, we are hoping there are solutions that will lead to a sensible tariff regime between regions,” CFO Jochen Breckner said on a press call on Wednesday after Porche’s annual results.
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Like its parent Volkswagen, Porsche is in the midst of a cost-cutting drive, shrinking its workforce by nearly 4,000 jobs and planning further cuts.
Sales dropped 3 per cent last year and it expects even lower sales this year, with the depreciation of recent investments squeezing its margins to just 10-12 per cent, without taking into account the impact of added tariffs.
Shares sank 4.5 per cent in late morning trading, the biggest decliner in percentage terms on Germany’s DAX index and near their lowest point since listing in September 2022.
Porsche has fallen from grace since its stock market debut, struggling particularly in China, where sales plunged 28 per cent in 2024 as consumers refrained from luxury spending amid a real estate crisis, and as EV-only Chinese start-ups won market share.
China made up 18 per cent of Porsche’s unit sales last year. – Reuters
