Porsche’s half-year revenue, operating profit, and automotive net cash flow have decreased by 7%, 67%, and 65% respectively. Operating profit excluding certain factors declined by 31%. Return on sales guidance for the full year has been adjusted to 5%-7%, down from 6.5%-8.5%.

Volumes sold in China are expected to have more than halved compared to 2022, with current volumes becoming the new normal. Porsche P911 plans to reduce its dealer network by a third. In the US, single-digit price increases are helping offset tariff burdens.

The path to historic high-teen margins for Porsche is unclear. Midcycle margins are forecasted around 15%, leading to a reduced fair value estimate of EUR 52 per share. A full powertrain flexible product range and headcount rationalization are expected by 2028 and 2029 respectively.

Despite a potential path to recovery in gross margins, operating margins may lag without significant cost-cutting measures. Volumes are predicted to stay below the 2023 peak well into the next decade. The timeline for achieving high margins remains uncertain for Porsche.

Read more at Morningstar: Adjusting the Business Model to a New Reality, We Think it’s Not Enough