Transition dilemma of electric vehicles drags down profits, Porsche (POAHY.US) expects sales return rate to drop to 10-12% this year.

Porsche (POAHY.US) will face a loss of 800 million euros (approximately 8.31 billion US dollars) this year due to product line adjustments, further squeezing the already disappointing profit margin of the sports car manufacturer. Porsche stated on Thursday that the cost of adding internal combustion engines and plug-in hybrid models to expand the product lineup will reduce this year's return on sales to between 10% and 12%. In addition, the company expects profit margins in 2024 to be at the lower end of the forecast range, around 14%. Last year, Porsche became one of the major automakers to slow down its transition to electric vehicles due to market demand falling below expectations. In the Chinese market, the challenge of transitioning to electric vehicles has come at a heavy cost for the company, with a decrease in deliveries. Earlier this month, Porsche disclosed that it may also replace its CFO and sales director at the same time. Porsche's profit margin last year did not meet the initial expectation of 15% to 17%. Bloomberg Intelligence senior industry analyst Michael Dean said Porsche's forecast for this year may not be well received by the market. "A profit margin guidance of 10%-12% in 2025 will disappoint," Dean wrote in a report. He pointed out that Porsche's guidance implies an adjusted profit margin of between 12% and 14%, below the analyst average expectation of 14.2%. Bernstein analyst Stephen Reitman maintained a "hold" rating on Porsche, stating that the "sharply deteriorating" outlook for 2025 is a "major concern." "Today's brief but important statement typically requires management to follow up with a briefing call in the short term to further explain and reassure the inevitably nervous market," Reitman wrote in a report. He stated that Porsche cannot wait until March 12 to take action when the financial results are announced. Porsche's stock price fell 27% last year, and the company, headquartered in Stuttgart, Germany, has been on a continuous decline since its IPO in 2022. Its market value has halved since reaching a peak of 109.5 billion euros in May 2023.