Investing.com -- Porsche (ETR:P911_p) AG (ETR:PSHG_p) on Wednesday reported a decline in profits for the 2024 financial year, citing weak demand in China and ongoing challenges in the global automotive market.
The German automaker posted an operating profit of €5.64 billion, a drop of 22.6% compared to the previous year’s €7.28 billion.
Revenue was down slightly at €40.08 billion, reflecting a 1.1% decrease from €40.53 billion in 2023. Porsche’s operating return on sales also fell from 18% to 14.1%.
The sports car manufacturer faced headwinds from a sluggish Chinese market, delays in the global shift to electric vehicles, and supply chain disruptions.
Despite these challenges, Porsche managed to achieve record sales in four of its five global regions, delivering 310,718 vehicles worldwide.
However, this marked a 3% decline from 2023’s total of 320,221. The Cayenne remained the best-selling model, with 102,889 units delivered, followed by the Macan and the 911.
"In no particular order from release/slides, we see more continuity than rupture in strategy and targets," said analysts at Jefferies in a note.
Electrified models—fully electric and plug-in hybrids—accounted for 27% of all deliveries, a share that is expected to rise to 33–35% in 2025.
To address the current economic downturn, Porsche will be cutting jobs as part of a larger cost-cutting strategy.
The Stuttgart-headquartered brand plans to reduce its workforce by 1,900 positions by 2029, leveraging natural turnover, demographic shifts, and voluntary measures such as partial retirement programs and severance agreements.
An additional 2,000 positions will be cut through the non-renewal of fixed-term contracts. Further restructuring discussions between Porsche’s management and the Works Council are set to take place later in the year.
Porsche is actively renewing its model range, having recently updated five key lines: the Cayenne, Panamera, Taycan, 911, and the upcoming all-electric Macan.
This revamping is backed by an €800 million investment aimed at restructuring and expanding the product lineup, maintaining a balance between combustion, hybrid, and electric powertrains.
Porsche is also assessing the feasibility of a new SUV with traditional and hybrid engines, with a potential launch towards the end of the decade.
"Mix of ICE (NYSE:ICE), PHEVs and BEVs into 2030s, with electrified to account for 27% o/w BEV 12.7% in 2024; target 20-22% BEV 2025 and 33-35% total EV should be +ve for VW compliance," Jefferies added.
The company’s Road to 20 initiative, aimed at improving cost efficiency, will play a crucial role in navigating ongoing market challenges.
While Porsche maintains its long-term target of a 20% operating return on sales, the company expects a decline to 10–12% in 2025 due to increased restructuring costs, persistent high supply chain expenses, and weaker sales.
Porsche’s 2025 outlook is tempered by concerns over continued economic uncertainty, intensified Chinese competition, and geopolitical risks, especially related to potential U.S. policy changes.
While forecasting revenue of €39–40 billion, the company notes that this figure does not include the potential impact of new trade restrictions or tariffs.
Despite the challenges, Porsche is maintaining its dividend at the previous year’s level, proposing a total payout of €2.1 billion, equivalent to €2.30 per ordinary share and €2.31 per preference share.