Profits forecasts have been adjustments made by VW Truck & Bus and Porsche SE following a setback in their earnings - Porsche SE, a subsidiary of VW-Dachholding, lowers its profit projection following a drop in earnings
The automotive industry is currently facing a host of challenges, with the U.S. tariffs and a slowdown in China being major contributors. These factors have taken a toll on the profits of several automotive giants, including Volkswagen and Porsche, and their impact is now being felt by Porsche SE.
Porsche SE, the holding company of Volkswagen and Porsche AG, has announced a lowering of its annual profit target. The company's net profit, including valuation changes, decreased by 1.8 billion euros in the first six months of the year. The adjusted earnings for Porsche SE in the same period were 1.1 billion euros, a billion less than the previous year.
The profit drop at Porsche SE is primarily attributed to the challenging situation at Porsche SE's core investments, Volkswagen and Porsche AG. The U.S. tariffs have heavily reduced operating profits for Porsche AG, with their operating profits dropping by around €2 billion in the first half of the year, despite a reduced EU-US tariff agreement (down to 15% from 25%, but still much higher than the previous 2.5%).
The collapse of China’s luxury car market has also impacted Porsche. Sales in China are forecast to be more than 50% lower than their peak, forcing a geographic sales pivot. The global market for electric vehicles is developing more slowly than expected, further weighing on profits, as Porsche and VW face regulatory and competitive pressures.
In response to these automotive sector difficulties, Porsche SE is seeking to diversify by increasing investments in the defense and security sector. The company aims to capitalise on increased European defense spending and geopolitical needs.
The new profit target for Porsche SE is between 1.6 to 3.6 billion euros, down from the previous target of 2.4 to 4.4 billion euros. The company continues to target a net debt corridor of 4.9 to 5.4 billion euros by the end of the year.
[1] Automotive News [2] Reuters [3] Bloomberg [4] Financial Times [5] CNBC
- The challenging employment situation in the EC countries' automotive industry is significantly impacting companies like Volkswagen and Porsche, as evidenced by Porsche SE's lowered annual profit target and the decreasing profits of its core investments.
- In an attempt to counteract the financial strain on Porsche SE, stemming from the automotive sector's difficulties, the company is broadening its investments to include the defense and security sector, capitalizing on increased European defense spending and geopolitical needs.
