Investing.com -- Porsche AG's (ETR:P911_p) early outlook for 2025 signals a challenging year ahead, as the company grapples with supply chain issues, higher costs, and a drop in vehicle volumes.
Analysts at Jefferies revised their forecasts downward following Porsche’s latest update, slashing the 2025 group EBIT estimate by 14% and reducing the price target (PT) for Porsche stock to €65 from €75.
The analysts updated their estimates for Porsche’s fourth quarter and full-year 2024 results, reflecting stronger-than-expected wholesales.
The revised estimates anticipate fourth quarter revenue growth of 12.5% year-over-year and a 7.5% year-over-year increase in wholesales, driven partly by the robust start of the e-Macan.
However, ongoing cost pressures, including supply chain inflation, CO2 initiatives, and BEV-related supplier compensation, are expected to weigh on margins.
Jefferies now projects Q4 2024 auto operating profit at €1.64 billion with a 15.3% margin, while group EBIT is forecasted at €1.72 billion, reflecting a 14.7% margin.
Full-year 2024 auto EBIT has been revised up by 4.6% to €5.41 billion (14.8% margin), with group EBIT up by 5.1% to €5.76 billion (14.3% margin).
Free cash flow for 2024 is now estimated at €3.4 billion, a 13% increase, driven by higher working capital inflows.
Porsche’s preliminary guidance for 2025 indicates that sales volumes are likely to decline compared to 2024.
This is due to the discontinuation of internal combustion engine versions of the Macan and 718 in Europe, weaker demand in China, and supply chain constraints affecting the 911 series.
Additionally, the Cayenne’s volumes are expected to normalize after a record year, while the gradual rollout of the e-Macan across markets will delay its full contribution to sales.
Higher depreciation and amortization on new launches, coupled with weak fixed cost coverage, are anticipated to pressure margins. Jefferies now forecasts 2025 group EBIT at €5.75 billion, reflecting a 14.0% margin (down 0.3 percentage points year-over-year).
Group revenue for 2025 has been revised down by 2%, with FCF expectations cut by 20% to €3.3 billion.
The outlook for 2026 is also less optimistic, with Jefferies reducing their group revenue forecast by 1% and group EBIT by 8%, citing continued headwinds. Management plans to hold a Capital Markets Day to outline Porsche’s long-term strategy, including its approach to powertrain transitions, cost structure, and enhancing brand exclusivity.
The company emphasized personalization (“Sonderwunsche”) as a key profit driver but did not provide further details.
Jefferies analysts noted that the magnitude of Porsche’s volume reset will be critical in determining whether the company can maintain its brand value while navigating these challenges.