Porsche Q3 2024 $P911 (+0,14 %)

Financial performance

Porsche's financial results for the first nine months of 2024 show a year-on-year decline in the key performance indicators. Group sales decreased by 5.2% to a total of 28.6 billion euros, while the Group's operating profit fell by 26.7% to 4.0 billion euros. In addition, the return on sales fell by 420 basis points to 14.1%.

Balance sheet analysis

As at September 30, 2024, Porsche's equity increased by 685 million euros to 22.354 billion euros, which corresponds to growth of 3.2%. In contrast, non-current liabilities increased by 462 million euros, while current liabilities rose by 495 million euros, resulting in an overall increase in liabilities of 1.642 billion euros.

Profit and loss account

The income statement shows a decline in gross profit from 8.589 billion euros to 7.285 billion euros, mainly due to falling sales and rising distribution costs. Operating profit fell from 5.501 billion euros to 4.035 billion euros, which led to a decline in the operating return on sales from 18.3% to 14.1%.

Cash flow analysis

Cash flows from operating activities decreased from EUR 5.368 billion to EUR 4.156 billion, largely due to the lower operating profit and changes in working capital. Cash flows from investing activities were negative at EUR -3.243 billion, reflecting significant investments in intangible assets and property, plant and equipment.

Key figures and profitability

The return on sales in the Automotive segment fell from 18.8% to 14.6%, while the EBITDA margin fell from 25.5% to 23.0%. The net cash flow margin in the Automotive segment also fell from 12.2% to 4.8%.

Segment analysis

Operating profit in the Automotive segment fell by 27.9% to 3.8 billion euros, with a return on sales of 14.6%. The Financial Services segment recorded a slight decline in operating profit to 210 million euros, with a return on sales of 7.4%.

Competitive analysis

Porsche faces challenges in the Chinese market, with a focus on value-oriented sales amid weak demand in the luxury segment. The company is actively managing demand and supply in China and is struggling with reduced availability of spare parts.

Forecasts and management commentary

Porsche maintains its revenue forecast for 2024 and expects revenue of between 39 and 40 billion euros and a Group return on sales of 14 to 15%. Despite macroeconomic challenges and geopolitical tensions, the company is continuing to invest in innovation, digitalization and sustainability.

Risks and opportunities

Significant risks include supply chain disruptions, particularly in China, and high costs. On the other hand, opportunities arise from the transition to e-mobility and investments in new technologies to increase customer satisfaction.

Summary and strategic implications

Porsche's financial performance in 2024 reflects a challenging environment characterized by declining profitability and cash flow. The company is focused on strategic investments and addressing supply chain issues to maintain its market position. The outlook remains difficult, with a focus on innovation and sustainability as drivers for future growth. The strategic implications suggest that Porsche needs to strengthen its flexibility and resilience in the face of changing market dynamics and geopolitical uncertainties. Clearly not a buy for me, and for so many reasons that it's hard to list them here.

Positive statements

Equity growth: Porsche's equity increased by 685 million euros to 22.354 billion euros, representing growth of 3.2% and indicating a stronger financial position.

Investment in innovation: The company is investing extensively in innovation, digitalization and sustainability, which positions it well for future growth and adaptation to market changes.

Robust order book: Porsche has a robust order book and expects improved availability of new models, which supports the positive forecast for the fourth quarter of 2024.

Balanced global sales mix: Despite challenges, Porsche has maintained a more balanced global sales mix that can mitigate regional market fluctuations.

Commitment to drive diversity: Porsche remains true to its commitment to a combination of efficient combustion engines, hybrids and fully electric vehicles (BEVs) to meet different customer preferences and regulatory frameworks.

Negative statements

Decline in turnover: Group sales decreased by 5.2% to €28.6 billion, indicating challenges in maintaining sales momentum.

Reduced operating profit: Group operating profit fell by 26.7% to €4.0 billion, indicating pressure on profitability.

Lower cash flows from operating activities: Cash flows from operating activities fell significantly, affecting the company's ability to finance investments and operations.

Challenges in China: Porsche faces significant challenges in the Chinese market, with a focus on value-oriented sales in a weak luxury segment.

Rising distribution costs: Distribution costs increased, impacting the overall cost structure and reducing the operating margin.