Porsche AG, the famed German sports car manufacturer, has faced significant challenges, particularly from its operations in China, which have heavily impacted its financial results for the fiscal year 2024. The company reported on March 12, 2025, a stunning 22.6 percent decrease in operating profit, which fell to €5.64 billion from the previous year. Earnings per share also plummeted by over 30 percent, shrinking to €3.95 per preferred share.
Despite these declines, shareholders were met with some good news as the board recommended maintaining the dividend, proposing €2.31 per non-voting preferred share and €2.30 per common share, much to their relief. This decision reflects Porsche's commitment to uphold shareholder value, even amid tumultuous times.
Porsche's total sales dipped slightly, down 1.1 percent to €40.1 billion from €40.5 billion, indicating slight resilience as the overall market faced challenges. Nevertheless, the operating margin suffered dramatically, falling from 18.0 percent to 14.1 percent. The company anticipates this profit margin will contract even more, settling between 10 and 12 percent for 2025, largely due to stiff competition and challenging market conditions, particularly within China.
Sales data revealed even graver issues, as the company's sales figures from China plummeted by 28 percent, which led to an overall reduction of nearly 3 percent, with just 310,718 vehicles delivered compared to 320,221 the prior year. Yet, it’s worth mentioning, Porsche achieved sales records across four of its five global regions, which shows its strong brand appeal outside of China.
To combat these challenges and reposition itself for the future, Porsche has initiated substantial restructuring efforts, including plans to cut approximately 1,900 jobs by 2029. This strategy includes measures such as not replacing retiring employees and implementing voluntary programs such as phased retirements. The previous financial chief, Lutz Meschke, indicated early on this year’s challenges and noted the company would have to adapt to produce around 250,000 vehicles annually instead of the previous target of 300,000.
Facing these realities, Porsche’s new financial head, Jochen Breckner, acknowledged the need for recalibrations within the company to strengthen its operational model. He explained, “Given the changing conditions, we have adjusted our product strategy across all segments.” This strategic adjustment entails continuing to offer models with fossil fuels well past the 2030s, even as Porsche works on transitioning to electric vehicle (EV) offerings.
Electric vehicles are expected to play a significant role moving forward, with forecasts indicating they will account for 20 to 22 percent of sales for the year 2025. Meanwhile, the company is also eyeing the development of new combustion and hybrid engine models by the end of the 2020s, especially for its SUV segment.
Investment remains part of Porsche's future plans, with about €800 million earmarked for product development, software, and battery technologies. This investment will bolster not just current offerings but also assist the company’s ambitions to regain its profitability margins.
Looking at the next five years, Porsche aims for medium-term profit margins between 15 and 17 percent, indicating its long-term goal of surpassing 20 percent remains intact. The current market climate, predominantly shaped by external pressures such as potential trade tariffs on imports to the U.S., necessitates this cautious approach.
Overall, Porsche has laid out its vision to recuperate from the existing downturn by emphasizing the high-end exclusive series and collector’s items, such as the iconic 911. The company's strategy focuses on enhancing the capacity of its Exclusive Manufaktur to cater to this lucrative segment. Meanwhile, as global economic conditions continue to evolve, analysts remain skeptical about how effectively Porsche can navigate these treacherous waters without significantly impacting shareholder value.
Despite these hurdles, the board’s decision to maintain dividends shows resilience and determination, allowing investors to keep faith amid uncertainty. The annual general meeting is set for May 21, 2025, where the stockholders will approve the board's proposed dividends, and it will be interesting to see how the market responds to Porsche’s strategies during this tumultuous period.