BERLIN: Porsche AG posts profitability at the upper end of its forecast for the year as the German luxury-car maker restructures to become leaner.
The Volkswagen AG brand yesterday reported operating profit of 595mil (US$696mil) for the first quarter (1Q), yielding a return of 7.1%, close to the top of its annual range. The profit was lower than a year earlier, as expected, due in large part to US tariffs and lower deliveries, including a 21% slump in China.
German automakers have been shuffling their model lineups and strategies as they grapple with excess factory capacity, tariffs and weak sales in China, the world’s largest car market. The fallout from Middle East conflict threatens to deal them another blow.
Porsche, once the major profit generator for parent VW, has been hit particularly hard. Last year’s deliveries fell the most since 2009, and the stock is worth roughly half of what it was when it listed in 2022.
The manufacturer was forced to cut guidance four times last year, taking nearly 4bil in charges after walking back its electric-vehicle plans.
In an effort to slim down the company, new chief executive officer Michael Leiters is due to begin negotiations with labour leaders on job cuts in the coming months.
Porsche previously agreed to reduce its headcount by some 3,900 by the end of the decade, including 2,000 temporary workers. It currently employs 40,000 people.
The manufacturer is also mulling future models and derivatives positioned above its two-door sports cars and the Cayenne sport utility vehicle to underpin margins. — Bloomberg
