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Reduced forecast for Porsche AG, yet stocks ascend - analysts attest to this rise

Autonomous automaker, Porsche AG, lowers projected profit margins, grappling with obstacles, yet evidences stock market rebound.

Decreased Porsche AG forecast leads to stock rise, according to analysts' analysis
Decreased Porsche AG forecast leads to stock rise, according to analysts' analysis

Reduced forecast for Porsche AG, yet stocks ascend - analysts attest to this rise

Porsche Faces Challenges in China and EV Market, Implementing Cost-Cutting Measures

Porsche AG, the iconic German automaker, is currently grappling with significant challenges in the Chinese market and the electric vehicle (EV) sector. The company's sales in China, once its largest market, have seen a steep decline, and the EV segment in the country remains soft due to rising local competition and shifting consumer preferences.

In response, Porsche is implementing deeper cost-cutting measures to offset weak sales in China and tariffs impacting the US market. CEO Oliver Blume has confirmed plans to negotiate further labor and expense reductions to preserve profitability amid these challenging global market conditions.

The company's financial performance reflects these challenges. Porsche reported a post-tax profit of around 518 million euros in the first quarter and just 200 million euros in the second quarter. In response, the company revised its profit outlook, expecting an operating profit margin of 5 to 7 percent for the year, down from the previously projected margin of 6.5 to 8.5 percent.

Despite these challenges, Blume remains optimistic about the future, citing a well-received product range. The company is undergoing a strategic realignment aimed at rescaling and recalibrating the company for the evolving automotive landscape. The management expects positive momentum to return from 2026 onwards as the company adapts to global economic shifts and market realities.

Porsche is also considering diversifying its product mix, potentially by maintaining or adding internal combustion engine (ICE) vehicles and plug-in hybrids alongside their EVs to respond to slower EV market growth and competitive pressures, especially in China.

The Chinese premium and luxury market demand has fallen sharply, and the EV segment in China remains soft, pressured by rising local competition and shifting consumer preferences. The trade agreement between the EU and the USA has a base tariff rate of 15 percent on most EU imports into the USA, further impacting Porsche's profits.

In summary, Porsche’s key current challenges in China and the EV market include a drastic decline in Chinese market share and EV demand, the impact of U.S. tariffs and global supply chain issues raising costs, and a slower-than-expected global transition to electric mobility. Their future plans involve strategic realignment, potential continuation of ICE and plug-in hybrid models, anticipation of market stabilization, and improved economic conditions from 2026 onwards.

On Wednesday, Porsche's stock made gains and broke above the 50-day moving average at 42.58 euros. The stock remains in the AKTIONÄR model portfolio but is still under observation. The new profit forecast is slightly better than market expectations, and the stock exited its short-term downtrend after the break above the 50-day moving average. Renewed targets for the year are in line with analyst consensus.

[1] Bloomberg [2] Reuters [3] Automotive News Europe [4] The Financial Times [5] Car and Driver

  1. Recognizing the challenging market conditions in China and the electric vehicle sector, Porsche is making adjustments to their financial standing by implementing cost-cutting measures, such as negotiating labor and expense reductions.
  2. In an apparent effort to address the slower growth of the electric vehicle market and competitive pressures, particularly in China, Porsche is also considering diversifying their product mix by maintaining or adding internal combustion engine vehicles and plug-in hybrids alongside their EVs.

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