Porsche's stock climbs as luxury brand touts dividend hike, model launches

By Barbara Kollmeyer

An earlier version of this report made an incorrect reference to Porsche Automobil Holding SE. The story has been corrected.

Porsche AG shares rose on Tuesday after the German luxury car maker forecast a tougher 2024 but also declared a dividend.

The German premium sports vehicle maker's (XE:P911) annual sales rose 7.7% to €40.5 billion and reported an operating profit of €7.3 billion, a gain of 7.6%. Both figures exceeded the Visible Alpha consensus of €40.29 and €7.23 billion, respectively.

But Porsche also warned that it expects the operating return on sales to fall to between 15% and 17% in 2024, after a return of 18% in 2023.

Part of this comes as the automaker plans several car launches this year: the Panamera, Macan, Taycan and 911 models. Oliver Blume, chairman of the executive board, called 2024 "a year of product launches" for the company and said it would surpass everything done so far.

"We will bring a variety of exciting sports cars to the road that will delight our customers around the world," said Blume.

The company had total car deliveries of 320,221 in 2023, a gain of 3.3% over 2022.

Porsche also said it would offer a dividend of 2.30 euros per common share compared to 1 euro last year. Porsche shares rose 4% on Tuesday, even as analysts expressed some concern about the lower guidance.

"Porsche highlighted higher launch costs for new models, higher depreciation charges and a weaker global economy. We see the guidance leading to consensus downgrades of 5%, following earlier downgrades in December," a team of Citi analysts said. led by Harald Hendrikse, who rates the automaker as neutral.

Hendrikse and his team said that Porsche's "transformation will take time" because the company's product range needed to be renewed.

"This is happening now, but the full impact on pricing and profitability will take time and will now come from a lower base. FY25E should be a better year with all products available, but obviously FY25E EPS [earnings per share] It is also likely to be lower now. "While there could be a potential buying opportunity later in FY24, we think many investors will expect better sales and earnings momentum," Citi analysts said.

-Barbara Kollmeyer

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03-15-24 0417ET

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