Porsche collapses in Frankfurt. Estimates cut knocks out VW stable and EU car bigwigs

(Il Sole 24 Ore Radiocor)- Porsche Ag starts the week with a heavy skid on the Frankfurt Stock Exchange, after cutting its 2025 earnings estimates, which 'infects', in addition to the Volkswagen Group, the other European biggies in the sector. Volkswagen, which is the majority shareholder of Porsche Ag with 74.5 percent, in turn revised its guidance; Porsche Automobil Holding SE also fell 7 percent to 32.68 euros. Also in reverse gearBmw , Mercedes-Benz Group and among other European bigStellantis and Volvo Car . Lower impact for Renault . On Friday, after the close of the session, Porsche Ag announced that it would slow the launch of its models electric due to insufficient demand and lowered its profitability forecasts for 2025, also signalling further difficulties for the group, - whose profits were almost nil in the second quarter - due to pressure on the key Chinese market and US tariffs. Among other initiatives, 'the vehicle project pursued together with the Volkswagen group in its original form will be abandoned'. The reprogramming of the new electric vehicle platform will require depreciations and provisions, which are expected to burden operating profit by up to EUR 1.8 billion in the 2025 financial year, Porsche indicated. As a result, the company now expects a maximum profit margin of 2% this year, down from an initial range of 5-7%, and an Automotive Ebitda margin of between 10.5% and 12.5% (versus 14.5% and 16.5%). Revenue estimates of EUR 37-38 billion were maintained. Volkswagen stated that it will suffer a negative impact of EUR 5.1 billion due to the major revision of the subsidiary's product range. In detail, Vw will record a non-cash impairment of about EUR 3 billion on Porsche's goodwill, and as a result of the lowering of Porsche's annual forecasts and the knock-on effects at the Volkswagen Group level resulting from the project adjustment, there will be a one-off impact of about EUR -2.1 billion on the group's operating profit in 2025. The Wolfsburg-based manufacturer has thus lowered its profit margin forecasts to 2-3% from the previous 4-5% . As a result, the group now expects an operating return on sales of between 2 and 3% in the 2025 financial year (previously it was between 4 and 5%), a net cash flow in the Automotive division of around EUR 0 billion (previously between EUR 1 and 3 billion). In addition, Volkswagen now estimates net cash of around EUR 30 billion (from EUR 31-33 billion), while the forecast for group sales remains unchanged (at the previous year's level). According to analysts at Jefferies, the revision of Porsche and Volkswagen's forecasts could be the last, but they warned that it could lead to challenges in terms of production cycle and brand image. Another trader called Porsche's strategic decisions 'inevitable', pointing out that the sports car manufacturer had become too dependent on electric vehicles. According to experts at Ubs, a more realistic review of targets is generally positive, but they expect Porsche's share price to continue to weaken, as the carmaker's shares remain significantly more expensive than those of Mercedes and Bmw and are traded like those of a luxury goods group. Ubs Research confirms its neutral recommendation on the stock and the target price remains at EUR 45. Deutsche Bank maintains its positive rating on the share,recommending its purchase, but lowers its target price from EUR 55 to EUR 50.