Summary
- Q1 profit margin falls to 8.6% from 14.2%
- Porsche slashes margin target to 6.5-8.5% range
- Sales now expected to reach 37-38 billion euros
- Porsche to release Q1 results later on Tuesday
- Shares down 6% in early Frankfurt trade
FRANKFURT, (Reuters) – Porsche’s margins plunged in the first quarter, it said on Tuesday, forcing the sportscar maker to cut its 2025 outlook in the wake of weakness in China, its main market, rising supply chain costs and U.S. tariffs that are disrupting the global car industry.
The U.S. tariffs are expected to raise car prices by thousands of dollars, reducing demand and hurting job growth, rattling an automobile industry already struggling with a slowing transition to electric vehicles.
Shares in Porsche were down 6% in early Frankfurt trade on Tuesday after the carmaker’s first-quarter results.
In April, Porsche one of the carmakers most exposed to tariffs as it has no U.S. production, said it had shipped added inventory to the United States to get ahead of tariffs and kept prices constant for orders made in March.
The group late on Monday said the tariffs, in place since April at 25%, weighed on its business in April and May, and it warned that its adjusted outlook does not factor in the future effects of tariffs.
Finance chief Jochen Breckner, in the job since late February, said the macroeconomic environment would remain challenging. “We can’t completely escape this, but we are doing everything within our power to counteract it.”
Porsche said it now expects revenue of between 37 billion euros and 38 billion euros ($42.17 billion-$43.31 billion) in 2025, down from its previous forecast of 39 billion to 40 billion euros. Its profit margin is forecast to drop to 6.5-8.5%, down from a previous forecast of 10-12%.
According to the average of analyst estimates in an LSEG poll, Porsche’s operating margin is seen at 9.7% on revenue of 38.8 billion euros. Its first-quarter operating margin fell to 8.6%, below the 9.8% analyst average estimate in an LSEG poll.
CHALLENGES IN CHINA
“We believe … the firm is taking the opportunity to kitchen sink estimates,” JP Morgan analysts said, adding it still expected Porsche to be able to get back to double-digit margins in 2026.
The car maker, which at its stock market debut in 2022 had a higher valuation than its parent company, Volkswagen AG , has fallen from grace since, struggling in particular with low sales in China, its top market, where first-quarter sales dropped 42%.
Bill Russo, CEO of Shanghai-based advisory firm Automobility, said Chinese customers of electric cars had been drawn to domestic brands because of their improved technological offering.
“No foreign company believed that the Chinese could somehow build equity that was superior to the foreign brands, especially the Europeans,” he said.
Porsche also said it would no longer pursue plans to expand high-performance battery production at its Cellforce subsidiary, and it cited a decline in demand in China for all-electric luxury cars.
($1 = 0.8774 euros)
Reporting by Gnaneshwar Rajan in Bengaluru, Tom Sims and Christoph Steitz in Frankfurt, Victoria Waldersee in Stuttgart and Amir Orusov in Gdansk; Editing by Sonali Paul, Muralikumar Anantharaman and Susan Fenton
