Porsche lowers forecasts: Floods and sluggish demand weigh on shares

Investing.com - The luxury car manufacturer Porsche (ETR:P911_p) has significantly lowered its revenue forecast for the current year. Due to flood damage at an aluminum supplier, the company now expects revenues of EUR 39 billion to 40B, instead of the previously expected EUR 40B to 42B. The EBIT margin will also be lower, ranging between 14 to 15%, compared to the previously targeted 15 to 17%.

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These adjustments caused significant losses in Porsche's Dax-listed shares on Tuesday, which fell by 6% in Frankfurt. Jürgen Molnar, capital market strategist at broker Robomarkets, commented: "Even though the management in Zuffenhausen cites the floods at a supplier as the reason, the stock's movement towards an all-time low tells a different story. Supply shortages should not be solely blamed for the generally weak demand for luxury goods, particularly in China."

The profit warning hits Porsche at a very inopportune time. Experts from Stifel emphasize that sentiment towards Porsche was already very negative. Delays in product launches, regulatory issues in the first quarter, weak demand for electric vehicles (BEVs), and low used car prices for the Taycan are burdening the company. "We believe the projected EBIT margin of 17 to 19% for 2025 is a strain on the investment case, and the market currently does not believe in a significant recovery from the forecasted 14 to 15% in 2025." Stifel considers the 2025 forecasts increasingly ambitious given the ongoing deterioration of the Chinese market. Therefore, the experts remain on the sidelines.

The supply shortages are a direct result of the flooding of a production facility of an important European aluminum supplier, according to Porsche. "Affected are aluminum body parts used in all Porsche vehicle series," the company explained in a statement. Despite immediate countermeasures, it is foreseeable that the impending supply shortages will impact production.

The production restrictions could last several weeks and may lead to production stoppages of individual or multiple vehicle series, the company further warned. These delays in production and vehicle deliveries may not be fully compensated for later in the fiscal year.

Next Wednesday, Porsche will release its figures for the first six months of the year.

Meanwhile, the VW parent company Porsche Automobil Holding SE (ETR:PSHG_p) has confirmed its forecast for the current year. Despite this, the Dax-listed share of Porsche SE also fell, recently losing around 2% in value.

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