STUTTGART (dpa-AFX) - Following last year's profit slump, sports car manufacturer Porsche AG has set surprisingly modest profitability targets for 2026. The operating return on sales for the Group is expected to range between 5.5 and 7.5 percent, the Volkswagen-owned company announced in Stuttgart on Wednesday. Analysts had recently projected an average of nearly 8 percent for the new year. Management, led by new CEO Michael Leiters, anticipates revenue between 35 and 36 billion euros.
The multi-billion euro costs associated with extending the lifespan of internal combustion engines largely eroded the company's profits in 2025. After-tax profit plummeted by 91.4 percent compared to the previous year, falling to 310 million euros, according to the MDax-listed group. In 2024, the Stuttgart-based firm had posted a bottom-line profit of nearly 3.6 billion euros. Revenue fell by almost a tenth last year to approximately 36.3 billion euros. The dividend is set to be reduced from 2.31 euros per preferred share to 1.01 euros.
While strong headwinds were already apparent for the Swabian carmaker in 2024, the situation worsened last year. Business in China stalled, U.S. tariffs proved costly, and the company's electric models met with significantly less demand than expected. Consequently, former Porsche CEO Oliver Blume overhauled the strategy before his departure—increasing the combustion engine lineup to regain momentum.
Strategic Shift Weighs on Earnings
However, this U-turn comes with a heavy price tag. Approximately 2.4 billion euros were incurred for this shift alone. Additionally, the winding down of the battery subsidiary cost around 700 million euros, with U.S. tariffs accounting for a similar amount. In total, these special items amounted to roughly 3.9 billion euros.
Operating profit sank by nearly 93 percent to 413 million euros. In the automotive segment—excluding financial services—the operating profit stood at just 90 million euros.
Porsche expects business to improve in the current year. However, management under new CEO Michael Leiters continues to anticipate "very challenging market conditions" and geopolitical uncertainties. Potential impacts from recent developments in the Middle East have not been factored in. Leiters took over at the beginning of the year from Blume, who has since focused on leading the parent company, Volkswagen.
"We will comprehensively realign Porsche, making the company leaner, faster, and the products even more desirable," Leiters stated in the release. "We are considering an expansion of our product portfolio to grow in higher-margin segments. In doing so, we are exploring models and derivatives both above our current two-door sports cars and above the Cayenne."/men/jwe
