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(Bloomberg) -- Porsche AG lowered another profitability goal set at the time of its blockbuster listing after the luxury-car maker’s earnings slumped due to tumbling sales in China.
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The German brand is now aiming for a return on sales of between 15% and 17% in the medium term, Chief Financial Officer Jochen Breckner said Wednesday, having previously targeted as much as 19%.
This year will see the start of an “extensive rescaling” with model, software and battery investments that will hit 2025’s financial results, the Volkswagen AG-controlled manufacturer said. The company is planning an additional 911 and mulling a new SUV line toward the end of the decade as it expands its popular combustion engine and hybrid car lineup.
Porsche shares fell as much as 5.2% on Wednesday. The stock has more than halved from its peak in May 2023.
Porsche is struggling to beat a clear path toward the lofty margins it was aiming for when it listed in 2022. Suffering from falling sales in China and lower demand for EVs in Europe, the company has repeatedly had to drop guidance since then. It’s also been plagued by model delays and supply-chain disruption.
The carmaker has responded by recently walking back EV targets and announcing plans to spend €800 million ($872 million) developing more models powered by fossil fuels. The 911 maker is now replacing key management board members and pursuing job cuts.
In China, Porsche has decided to forgo steep discounts even as the price war involving more affordable cars seeps into the luxury space that the German brand occupies, Chief Executive Officer Oliver Blume told reporters. The company has responded to the sales slump there by reducing volumes and revising its strategy, including updating current models with new in-car features, he said.
The lower target came as Porsche reported that operating profit in 2024 plunged 23% to €5.64 billion from a year earlier. Sales fell 1.1% to €40.08 billion.
The company’s return on sales was 14.1%, at the lower end of its own range. Despite lowering its medium-term target, it’s sticking to a long-term margin goal of more than 20%.
Porsche last month said it anticipates up to €40 billion in sales this year, with a return on sales as low as 10%. VW on Tuesday said it expects to maintain profitability this year, even in the face of muted demand in Europe and rising trade tensions.