Porsche shares fall as company warns of lower sales

German car giant Porsche’s shares plunged 4.9% in Frankfurt on Wednesday afternoon after the company issued its second profit warning in as many months, highlighting the likely negative impacts of falling sales and rising costs. 

Porsche announced group sales revenue of €40.1 billion for 2024, down 1% on the previous year, although it said more competitive pricing and customisation options helped limit losses to an extent.

Group operating profit was €5.6bn last year, down from €7.3bn in 2023, with operating return on sales falling from 18% to 14.1%, a reflection of narrowing profit margins.

Back in February, the company revealed that it would be investing €800 million in new hybrid and internal combustion engine models, a move which is expected to hit profits this year. 

Porsche confirmed it plans to cut about 1,900 jobs by 2029, in addition to 2,000 job losses expected immediately as fixed-term employment contracts expire, with employees encouraged to accept severance packages or take early retirement.

“The whole industry was already in a difficult place as it dealt with a mismatch between regulation around the transition to electric vehicles and uneven demand for EVs among consumers, as well as mounting competition from China and weak consumer sentiment,” said Russ Mould, investment director at AJ Bell. 

“At Porsche, this has been compounded by supply chain issues and delays in the roll-out of new models,” Bell added. “Now tariffs have been added to the mix, it looks even harder for Porsche to arrive at its goal of a 20% margin.”

Mould also highlighted that although focusing on streamlining the company and replacing key executives could prove to be good steps for Porsche, these are unlikely to help the company much in the