Porsche, China and US customs sink first quarter operating profit

Porsche's operating profit fell to EUR 1.28 billion in the first quarter (EUR 1.84 billion in the same period of 2023, -43%), achieving the most disappointing result since the stock exchange listing in September 2022. Revenues reached EUR 9.01 billion (EUR 10.10 a year ago). Weakness in the Chinese market was coupled with difficulties clearing vehicles in the US. The company from Zuffenhausen (Stuttgart) had indeed predicted that the early part of the year could hit a low due to the launch of several important revamped models: the restyling of the full-electric Taycan, the third generation of the Panamera and, to follow, the second generation of the Macan (first and long-awaited electric version).  The new 911 (992 series) is expected in early summer and there will also be a high-performance hybrid drive. In addition for Boxster minimal updates, while the electric is expected in 2025.

Although the order book is mostly full for the current year, new vehicles such as the electric Macan and 911 (or 922) will weigh on production and yields in the coming months, said Chief Financial Officer Lutz Meschke, who said there should be a 'strong acceleration' in profits in 2025.

The return on sales in the three months to March fell to 14.2 per cent (18.2 per cent a year ago), below the carmaker's annual guidance (between 15 and 17 per cent, target unchanged for year-end) and analysts' expectations. The forecast is for profits and profitability to stabilise at around 17-19% in 2025. In the long term, however, Porsche has always maintained that it aims for a return of more than 20%. The Group's sports car brandVolkswagen, meanwhile, maintained its guidance for the full year 2024, which forecast group sales of 42 billion.

The ramp up in the first three months also had an impact on inventories and sales, explained Stuttgart. "In a difficult environment," said Volkswagen CEO Oliver Blume, "we are staying the course and pursuing our strategy with determination. In this year of Porsche product launches, we will put four new and exciting sports cars from four model lines on the road. This will ensure that we have the wind in our sails for years to come. My thanks go to our highly motivated team, which is handling the challenging product launches with great skill." 2024 will be the biggest product launch year in the company's history.

Returning to the difficulties in China, deliveries in the first quarter in Porsche's main market fell by 24% to 16,340 vehicles. China accounts for just over a fifth of total sales. This week Meschke attended the Beijing Auto Show (Auto China 2024), where the latest technological advances from local players such as Chinese electric vehicle leader BYD or the emerging Xiaomi were on display, with record orders for the new and so far only naturally electric vehicle, the SU7, whose design is reminiscent of the Porsche Taycan. 'It is impressive what the local Chinese brands are doing with regard to electrification,' Meschke commented. 'The efforts of the Chinese brands are enormous. We have to monitor the situation closely as European operators.