Porsche Reports 30% Decline in Earnings Amid Strategic Shifts

Stuttgart - The renowned sports and SUV manufacturer Porsche has faced significant challenges over the past year, culminating in a stark 30.3% drop in profits for 2024. According to the latest report from the company, its net income has fallen to approximately EUR3.6 billion, down from EUR5.2 billion the previous year. This downturn is largely attributed to a sluggish performance in the Chinese market and escalating costs associated with the renewal of vehicle models.

The company has experienced a tumultuous period recently, marked by substantial changes in its leadership. In February, Porsche announced a restructuring of its board, resulting in the departure of long-serving executives, including the Chief Financial Officer and the Sales Chief. Additionally, the Volkswagen subsidiary revealed a shift in its strategic focus, indicating a renewed investment in combustion engines and plug-in hybrids.

Porsche's production figures also reflect a challenging year, with vehicle deliveries decreasing by 3% to around 310,700 units. The decline was particularly pronounced in the Chinese market, which saw a 28% drop in sales. The company's revenue also experienced a slight contraction, falling by 1.1% to just over EUR40 billion, while operating profit dropped nearly 23% to EUR5.64 billion.

The company's operational profitability has also diminished, with the operating margin dropping to 14.1%, a decrease of 3.9 percentage points compared to the previous year. This decline moves the company further away from its long-term profitability goal of exceeding 20%.

Jochen Breckner, the newly appointed Chief Financial Officer, stated that despite the challenges faced in 2024, Porsche has demonstrated resilience, maintaining a high level of profitability and financial stability. However, the company is adopting a more cautious approach moving forward. For the current year, Porsche plans to invest approximately EUR800 million in new models and a cost-saving program aimed at reversing the decline in its business.

As part of this strategy, the management anticipates a further decline in operating margins, projecting figures between 10% and 12%. Revenue for 2025 is expected to stabilize between EUR39 billion and EUR40 billion.

The changing dynamics in the automotive market, particularly the shift towards electrification and sustainability, continue to pose challenges for traditional manufacturers like Porsche. As the company navigates these turbulent times, its strategic decisions will be crucial in regaining its competitive edge and ensuring long-term viability in the evolving industry landscape.