Porsche stock (POAHY) is sliding after the company cut a key profit target — and revealed it may pass down tariff costs to its well-to-do customers.
Porsche said it expects a global operating return on sales (or ROS, a measure of profit margin) in a range of 10% to 12% in 2025, down from 14.1% in 2024 — and sharply down from 18% ROS in 2023. Issues with China, rising costs, and a product revamp would continue to weigh on results.
The German luxury automaker said it is targeting a medium-term (two- to five-year timespan) ROS of 15%-17%, a drop compared to the 17%-19% it had previously forecast. The company still aims for a long-term (more than five years) ROS of “more than 20%,” CFO Jochen Breckner said in a statement. Porsche stock was down 3% on Wednesday.
Why the margin woes? Porsche cited a deteriorating situation in China, where new competition and deep price cuts have hurt revenue in the region. Escalating trade wars — namely President Trump’s threat of tariffs on European imports — are also weighing on the company’s financials.
Regarding tariffs, Breckner said the company’s well-off customers may bear the brunt.
“When the subject [of tariffs] becomes concrete, we will assess which price options there are to pass on to consumers,” Breckner said in a news conference following the release of results, per Reuters. “We have a very, very strong brand, a great customer base, a loyal customer base, and great product. So in the first place, we would look into additional pricing” to preserve margins.
Read more: What Trump’s tariffs mean for the economy and your wallet
Aside from tariff escalation, which the company is not modeling yet in its profit forecast, the company is in the midst of a cost-cutting initiative as it responds to a difficult environment in China and rising costs for materials and parts.
The company said it would slash 1,900 jobs by 2029 and that another 2,000 jobs would be eliminated through the expiration of contracts in the same time period.
Another problem: Porsche bet heavily on EVs and has seen that business tail off recently. Porsche CEO Oliver Blume said a “refreshed” product offering was coming, with the company relying on a mix of drivetrains like gas engines and plug-in hybrids, as well as battery EVs.
“In view of the changed circumstances, we have adjusted our product strategy in all segments,” Blume said in a statement.
For example, in addition to the updated 911 sports car launched for the 2025 model year, Porsche will debut an all-new Cayenne SUV — with multiple drivetrains — later this year.
