Investing.com -- Shares in Porsche AG (ETR:P911_p) tumbled after the sports-car maker warned of an €800 million ($831 million) financial hit as it revamps its vehicle lineup this year and its profit margin guidance widely missed expectations.
Porsche surprised investors late Thursday by forecasting a profit margin of just 10-12% for this year, falling short of the 14.4% consensus estimate and well below its mid-term target of 17-19%.
Porsche stock dropped as much as 8% in early trading before recovering some ground. As of 09:22 GMT, shares were down 4.5%. The decline extends a year-long slump that has wiped out over 30% of the stock’s value. Since its 2022 IPO, Porsche’s market capitalization has halved from its May 2023 peak of €109.5 billion.
Last year’s profit margin also fell short of expectations, missing the initial target of 15% to 17%.
Porsche was among several automakers that scaled back their EV ambitions last year due to weaker-than-expected demand. This shift has been particularly costly in China, where the company has seen a decline in deliveries.
Earlier this month, Porsche signaled potential leadership changes, with both its CFO and sales chief at risk of being replaced.
Increased spending on model customization and investments in battery-related subsidiaries have also impacted profitability and cash flow.
"We think the combination of "kitchen sinking" and the replacement of some executive board members, including the CFO, is an opportunity for a reset and getting the business back on track operationally, also with an adjustment in the product strategy with next-gen ICE vehicles," UBS analysts commented.
"However, this should take time (we think until 2027) and investments should remain high in the meantime. Therefore, a turnaround of the negative earnings trend is not a matter of just a couple of quarters," they added.