By Simon Ferdinand Eibach and Rachel More
BERLIN (Reuters) -Porsche shares were down 7.5% by late morning on Monday after the carmaker dialled back its electric vehicle rollout and cut guidance in a costly strategy reversal prompted by weak demand.
The German luxury carmaker’s parent Volkswagen, and holding company Porsche SE, Volkswagen’s biggest shareholder, were down by 7% and 7.6%, respectively.
Porsche on Friday announced a delay in the launch of some all-electric models in further signs of trouble for the company, whose profits were nearly wiped out in the second quarter after it came under pressure in China, its key market, and from higher U.S. tariffs.
The strategy shift is expected to hit operating profit by up to 1.8 billion euros ($2.12 billion) this year, the company said. Porsche now expects its 2025 profit margin to be no more than 2%, down from a previously guided range of 5% to 7%.
Some analysts saw the guidance cut as inevitable given pressure on Porsche to extend the life of its combustion engine given the sluggish demand for EVs.
Porsche has said it expects the realignment to have a positive impact in the medium- to long-term.
CORRECTING THE EV ‘MISTAKE’
Volkswagen, Europe’s top carmaker, said it would take a 5.1 billion euro hit from the overhaul at its 75.4%-owned subsidiary.
Volkswagen cut its profit margin outlook to 2% to 3% from 4% to 5%, while Porsche SE also cut its outlook for profit after tax.
Jefferies analysts said the revision of Porsche’s outlook – the third so far this year – may be the last but warned that it could bring product cycle and brand challenges.
With much of Porsche’s 1.8-billion-euro charge likely in the third quarter, the analysts said they expected a loss for the company in the second half.
One local trader said the strategic decision was “inevitable” and warned the company had become too dependent on electric vehicles.
“The correction of the former mistake to become too dependent on EVs will take time,” said the trader, who shared their notes on condition of anonymity.
Problems at Porsche and Volkswagen have fuelled calls from shareholders for Oliver Blume to end his dual role as CEO of both companies.
($1 = 0.8501 euros)
(Editing by Miranda Murray and Kate Mayberry)
