(new: management statements, share price updated)

STUTTGART (dpa-AFX) - The VW sports car subsidiary Porsche AG is setting itself cautious profit targets in view of the many model changes this year. Despite further supply chain disruptions, strong inflation and high investments, Porsche increased its profit last year and kept the return on sales stable in day-to-day business, as the Stuttgart-based company announced in Stuttgart on Tuesday. "We are launching an unprecedented product offensive in 2024," said CEO Oliver Blume according to the press release. "This will give us a tailwind for the coming years." The DAX-listed preference share rose significantly in the afternoon.

The preference share, which has been under pressure for several months, rose by almost eight percent to 86.92 euros at the top of the index. The sports car manufacturer went public in September 2022 at 82.50 euros. In June 2023, the share price had scratched the 120 euro mark after a high. However, problems with sales in the important Chinese market then increasingly weighed on the share price.

Investors were aware that Porsche was facing a year of transition. The fourth quarter turned out better than generally expected, wrote analyst Philippe Houchois from the investment bank Jefferies. However, the outlook remains somewhat below expectations.

JPMorgan expert Jose Asumendi expressed a similar view. He expects a significant upturn in results in the second half of the year and then full momentum in the coming year. Price increases are likely to come to bear as early as this year. According to Goldman Sachs analyst George Galliers, Porsche is concentrating on successful model launches and quality for customers. Increased depreciation and amortization would add to this.

Blume's management expects the operating return on sales - i.e. what is left over from sales as operating profit in day-to-day business - to be in the range of 15 to 17 percent in 2024. This would be less than the margin of 18 percent held stable in the previous year and also less than analysts had previously calculated. Porsche is forecasting turnover of 40 to 42 billion euros. In 2023, the company generated revenue of 40.5 billion euros, also thanks to an increase in deliveries of a good three percent, almost eight percent more than in the previous year.

This year, Porsche is launching new versions of the Panamera and the Taycan electric sports car as well as the long-awaited all-electric Macan. In addition, the new Cayenne, the Zuffenhausen-based company's best-selling model, was launched late in 2023. The classic 911 sports car will also be refreshed in early summer.

Porsche had already indicated that the staggered product launches would be challenging. The many innovations are intended to rejuvenate the product range and open up more business opportunities with more attractive cars. However, this will initially cost money. At the press conference, Blume spoke of activation costs in the markets, i.e. expenditure on advertising and marketing. In addition, the volume of the affected models will remain lower for a certain period of time. CFO Lutz Meschke said that the company wanted to approach the ramp-up in a quality-driven manner and was therefore taking its time.

In the medium and long term, Porsche is sticking to its return ambitions, said the CFO. In the medium term, Porsche is aiming for a margin of 17 to 19 percent, and in the long term it should even be driven to over 20 percent. Porsche will reach its peak in terms of expenditure on capital expenditure and research and development in 2025 or 2026.

In order to significantly increase the margin in the long term, Porsche launched a new earnings program around a year ago. "We are also investing a lot of money here in order to tap into new sources of revenue," said Meschke. According to the information provided, this includes exclusive offers and services in particular.

Porsche wants to remain flexible in production and be able to build combustion engines, plug-in hybrids and fully electric cars at the same time. Last year, the proportion of fully electric vehicles rose by 1.5 percentage points to 12.8 percent. This year, it is set to increase further with the new Macan. In the middle of the decade, a fully electric 718 and an electric SUV, which is positioned above the Cayenne and should therefore deliver high sales prices, are to be added.

Last year, things went worse, especially in the important and lucrative Chinese market. Blume explained that the economic environment there was a problem for Porsche, particularly due to the real estate crisis in the country. Many wealthy Chinese had invested in the sector and therefore lost money. By shifting volumes to other regions, the company had nevertheless been able to increase sales overall. Porsche had reduced production for China in the face of the problems.

According to the management, the environment in China should improve again by the end of 2024 or 2025. With the new electric products, Porsche is entering attractive market niches in China in which the company does not have to take part in the unpopular discount battles, Blume promised. The manager had already made it clear on several occasions that Porsche prioritizes profitability over sales volume.

In 2023, profit after tax rose by just under 4 percent to 5.16 billion euros. The dividend is set to increase from 1.01 euros to 2.31 euros per preference share. Around a quarter of the preference shares are in free float, with the remainder belonging to the Volkswagen Group. The ordinary shareholders - currently exclusively the Wolfsburg-based car giant and the VW umbrella holding company Porsche SE, owned by the Porsche and Piech families - will receive a dividend of 2.30 euros per share./men/niw/jha/