Automotive

Porsche SE, profits plunged and estimates cut. Green light for a defence fund

Bad half-year for the holding company of the Vokswagen Group and Porsche AG. Now focus on satellite surveillance, reconnaissance and sensor systems, cybersecurity and logistics

by Alberto Annicchiarico

13 August 2025

3' min read

3' min read

Porsche Automobil Holding SE faces the deepest crisis in its recent history with a move as bold as it is controversial, but perfectly in line with the moment: after halving its half-yearly profit and drastically cutting its forecasts for the whole of 2025, the Porsche-Piëch family holding company has made it official to enter the defence sector, riding the wave of rising European (and German) military spending.

The first-half numbers paint a bleak picture for the Stuttgart-based holding company, which controls none other than the Volkswagen Group with 53% of the voting rights and Porsche AG with a direct share of 12.5% and another 75.4% through VW. Adjusted net profit stopped at EUR 1.1 billion, down 48% from EUR 2.1 billion in the same period of 2024. Even heavier was the slump in profit after tax, which plummeted to 300 million from 2.1 billion in the previous year.

Cut Estimates and Defence Diversification

The financial debacle has prompted management to revise downwards its estimates for the entire financial year: the adjusted net result is now expected to be between EUR 1.6 and 3.6 billion, well below the previous range of EUR 2.4 to 4.4 billion. A correction that testifies to the severity of the crisis affecting the entire German automotive sector, which is grappling with Chinese competition, the electricity transition and global geopolitical tensions, US tariffs in the lead.

It was in this context that Porsche SE unveiled its defence diversification strategy, announcing the creation of a fund specialising in investments in military start-ups. 'Our goal is to increase involvement in defence sectors while maintaining the main focus on mobility and industrial technology,' said chairman of the supervisory board Hans Dieter Pötsch, who holds the same position in the Volkswagen Group.

The move does not represent a quantum leap: the family's automotive empire has historical roots in the military-civil sector. Volkswagen already operates a joint venture with Rheinmetall (Germany's leading arms manufacturer) for military vehicles, while Porsche SE has invested millions in drone manufacturer Quantum Systems. The strategy now includes a focus on satellite surveillance, reconnaissance and sensor systems, cybersecurity and logistics.

The irony of history

The timing of the announcement is no coincidence: Europe is preparing to release hundreds of billions of euros for military and infrastructure spending, offering lucrative opportunities for those who know how to position themselves correctly. However, the decision to diversify into defence raises questions in Germany, where the debate on the remilitarisation of the economy (see under ReArm EU or Readiness 2030, the EU's 800 billion plan) remains heated after decades of post-war pacifism.

Auto, Duse: produzione per Difesa sarebbe marginale, tempi lunghi

The irony of history does not escape observers: Ferdinand Porsche, founder of the sports brand, contributed to the development of tanks for Nazi Germany and designed the Beetle, which was used as a base for military vehicles during the Second World War. His descendants, including his grandson Ferdinand Piëch, the former CEO of Volkswagen, are now turning their attention back to the military sector to revive the group's fortunes.

The diversification strategy comes as net debt is reduced to 4.9 billion from the previous 5.2 billion, providing the necessary financial margin for new investments. It remains to be seen whether this bet on European defence will be enough to offset the billions in automotive losses and restore momentum to a group that has dominated the global auto industry for decades.

Stock performance

The market welcomed the announcement of Porsche SE: the share price gained more than 1% and was among the best of the Dax40. During the year, the trend was characterised by a sharp fall after the first quarter and a volatile recovery. It should be noted that the timing of the Brussels and Berlin defence decisions (March-April 2025) overlaps with the period in which Porsche SE's share price started to recover after the slump related to the automotive difficulties.

An implicit confirmation that the shift in investment strategies towards defence technology, supported by European plans and the go-ahead from the Merz government, played a central role in improving investor sentiment and supporting the recovery of Porsche SE stock, more so than the traditional outlook for the automotive sector, which at the same time was being penalised by US tariffs, uncertain European demand and difficulties in China due to strong competition and falling sales.

Alberto Annicchiaricovicecaposervizio
Luogo: Milano
Lingue parlate: inglese (C1), buona comprensione di francese e spagnolo
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