(Update: share price, management comments, additional analyst.)
STUTTGART (dpa-AFX) - Following a collapse in profits last year, sports car manufacturer Porsche AG has set surprisingly modest profitability targets for 2026. The operating return on sales for the Group is expected to be between 5.5 and 7.5 percent, the Volkswagen-owned company announced in Stuttgart on Wednesday. Analysts had recently penciled in an average of almost 8 percent for the new year. Management, led by new CEO Michael Leiters, expects revenue of between 35 and 36 billion euros. The share price continued to recover slightly following a strong previous day.
"Global challenges and the realignment of the company weighed on the 2025 result. In 2026, our recalibration measures will also have one-off earnings effects in the high triple-digit millions," said CFO Jochen Breckner, according to the statement. This is being accepted in order to strengthen Porsche's resilience.
The MDax-listed share gained 1.4 percent to 38.44 euros at midday. The stock thus continued its recovery from the slump following the Iran conflict. Analyst Philippe Houchois from the US investment bank Jefferies spoke of a bleak outlook - although, according to his estimate, the newly announced additional special costs account for two percentage points or more of the operating margin. Tom Narayan from the Canadian bank RBC stated that he had expected market expectations to be too high.
The billions in costs for extending the lifespan of internal combustion engines largely consumed the company's profit in 2025. Profit after tax plummeted by 91.4 percent year-on-year to 310 million euros, the Group announced. In 2024, the Stuttgart-based company had still earned almost 3.6 billion euros on the bottom line. Revenue fell by almost a tenth last year to around 36.3 billion euros. The dividend is set to drop from 2.31 euros per preferred share to 1.01 euros.
While sharp headwinds for the Swabian carmaker were already apparent in 2024, things got even worse last year. Business in China stalled, tariffs in the USA cost a lot of money, and the company's electric models were significantly less popular than expected. Former Porsche CEO Oliver Blume therefore overhauled the strategy before his departure - offering more combustion engines is intended to provide momentum again.
Strategy shift weighs on profit
However, the turnaround is costing a significant amount of money in the short term. Around 2.4 billion euros were incurred for this alone. In addition, the winding down of the battery subsidiary weighed in at around 700 million euros, with US tariffs costing approximately the same amount. In total, this results in special costs of around 3.9 billion euros.
Operating profit slumped by almost 93 percent to 413 million euros. In the automotive business - i.e., excluding financial services - the operating profit was even as low as 90 million euros.
Overall, Porsche expects business to improve slightly in the current year. However, management under new CEO Michael Leiters continues to anticipate "very challenging market conditions" - including in China, where the luxury segment remains under pressure. Furthermore, geopolitical uncertainties and US tariff policy are expected to persist. Potential impacts from recent developments in the Middle East have not yet been taken into account.
Leiters also announced a new strategy for the carmaker: "Since I took office, our leadership team has systematically analyzed the situation and initiated a series of initial targeted measures," the manager stated. Among other things, the management structure will be streamlined, hierarchies dismantled, and bureaucracy reduced. Additionally, an expansion of the product portfolio is being considered. Leiters succeeded Oliver Blume at the beginning of the year, who has since focused on leading the parent company Volkswagen.
Further job cuts
Employees must brace themselves for further job cuts. To streamline the organization, "a program was already set up before my arrival, which we are now tightening significantly," said Leiters. "Yes, and that will also include further job cuts."
The manager left the scale of the job cuts open. "This requires discussions between the social partners, and it would be unfair if we were to anticipate that here today." He also did not comment on when further details would be available. However, everyone is aware that they must work on this with great urgency, Leiters said.
According to the information, the cuts are to be part of a comprehensive future package. This, in turn, is heavily dependent on the new Strategy 2035, said the Porsche CEO. This is to be presented in the autumn. He is not striving for more sales volume, but for more margin, Leiters said.
3,900 positions already cut
In view of the crisis, Porsche must shrink its structures. The company and employees have already agreed on a savings package: around 1,900 jobs in the Stuttgart region are to be cut in a socially responsible manner by 2029. In addition, the contracts of around 2,000 temporary employees have already expired. Discussions about a further future package were already started in the autumn under former CEO Blume. So far without result.
Leiters has picked up this thread: "We are currently in a very early stage of exchange," said the former Ferrari and McLaren manager. He perceives the talks as constructive./men/jwe/niw/stk
