Blume presenting the world premiere of the electric Macan in Singapore on Jan 25 last year. Sales of the model has been underwhelming so far.
LONDON: Porsche AG is falling further off track from lofty targets set during its splashy stock listing two years ago, with costs mounting from executives having misjudged how eager sports-car buyers were to go electric.
The 911 maker’s profit margin will slump to as low as 10% this year, half the 20% level management floated before an initial public offering that raised around €9.4 billion (RM44bil).
The stock dropped Friday to a new low since the IPO, plunging as much as 8%.
The "sharp deterioration” in outlook is a "major concern,” Bernstein analyst Stephen Reitman said in a note. He urged Porsche executives to convene a call with investors "to further explain and reassure an inevitably febrile market.”
At around €50 billion (RM231bil), Porsche’s market value is now less than half what it was in May 2023.
The steep decline heaps more pressure on chief executive officer Oliver Blume, who runs both Porsche and Volkswagen AG.
Porsche indicated this past weekend that the supervisory board likely will oust both its chief financial officer and sales chief.
Porsche was among the major automakers to pull back from transitioning to electric vehicles last year, citing underwhelming demand.
Challenges with making the jump to EVs have cost the company dearly in China, where deliveries dropped 28% last year.
Porsche said late Thursday that it will take an €800 million (RM3.7bil) hit this year tied to expanding its product portfolio with more combustion engine and plug-in hybrid models.
While the company’s all-electric Taycan got off to a fast start following its 2020 debut, sales stumbled last year, and a new EV version of the Macan sport utility vehicle has underwhelmed.
Return on sales for 2024 is expected to end up at the lower end of its forecast range, or around 14%. This projection was already lowered back in July, with executives blaming supply chain snags.
"Porsche is a luxury brand OEM and is not generating profitability in line with that,” Citigroup Inc. analyst Harald Hendrikse said in a note.
"The €800 million hit doesn’t fully account for Porsche’s shortfall, suggesting some execution gaps.”
In a knock-on effect of Porsche’s disappointing outlook, the holding company majority owned by the billionaire Porsche-Piëch family said late Thursday that it now expects to book an even bigger impairment on the carrying value of its investment in the carmaker.
Porsche automobil Holding SE said the impairment could be in the €2.5 billion to €3.5 billion range. Back in December, the holding company was bracing for a €1 billion to €2 billion setback.
In addition to expenses tied to rolling out more gasoline and hybrid models, Porsche blamed the lower forecast for this year on efforts to bolster its car-customization offerings and increasing investments in battery subsidiaries.
Porsche’s announced this past weekend that the supervisory board authorised discussions with CFO Lutz Meschke and sales head Detlev von Platen to terminate their appointments.
German media outlets have speculated that Blume may also have to relinquish his position at the top of Porsche to focus on leading Volkswagen.
