Porsche’s first-quarter earnings jumped as luxury carmakers continued to show gains despite a slowing global economy.
Operating profit rose to €1.84bn (R37.11bn) while revenue increased to €10.1bn (R203.85bn) in the first quarter, the company said on Wednesday. That’s about 25% higher than last year, though it failed to impress investors watching for aggressive price increases. Porsche shares fell by 3.6%.
High-end carmakers such as Porsche, Mercedes-Benz and BMW have proven to be less exposed to softening global demand and inflation hitting consumers, but economic uncertainties are weighing on the industry.
Porsche plans to increase prices by 4% to 8% in the second half of the year for new models in the US and Europe, CFO Lutz Meschke said. He added the company expects the base prices for its electric vehicles to be 10% to 15% higher than the corresponding internal combustion engine models.
“The expectation when it comes to the BEV transition is we can achieve a very high price premium,” Meschke said.
Porsche, which reiterated its 2023 guidance that margins would stay in a range of 17% to 19%, said its return on car-making was 18.2% in the first quarter.
Carmakers are still getting a boost from pent-up demand after supply-chain issues capped output, though uncertainty about global demand persists. Stellantis' first-quarter sales climbed more than expected thanks to strong vehicle prices and higher shipments of models such as the Jeep Compass.
But pressure on carmakers remains, particularly after Tesla’s decision to cut prices on its EV line-up, a drag on mid-segment electric models. Yet, for luxury carmakers such as Porsche, analysts are watching whether they can raise prices more to offset higher input costs.
“They key thesis on Porsche is they can push pricing in this environment,” said Bernstein analyst Daniel Roeska. “If that’s not happening, that’s the worry.”
The maker of the 911 sports car, which remains majority owned by parent Volkswagen since last year’s listing, is targeting a move further upmarket to battle Ferrari. The German company is planning an all-electric high-performance SUV above its battery Cayenne, slated for about 2026, as part of a plan to boost operating margins to more than 20%.
Porsche’s financial services unit was less immune from the impact of inflation and rising interest rates. In the first quarter, the division saw its operating profit fall to €86m (R1.73bn) from €102m (R2.05bn) on the valuation of interest rate hedges and derivatives, and said the share of leased and financed new cars declined to 42% from 46% last year.
More stories like this are available on bloomberg.com
Porsche profit rises on stronger sales, pricing power
Image: Bloomberg
Porsche’s first-quarter earnings jumped as luxury carmakers continued to show gains despite a slowing global economy.
Operating profit rose to €1.84bn (R37.11bn) while revenue increased to €10.1bn (R203.85bn) in the first quarter, the company said on Wednesday. That’s about 25% higher than last year, though it failed to impress investors watching for aggressive price increases. Porsche shares fell by 3.6%.
High-end carmakers such as Porsche, Mercedes-Benz and BMW have proven to be less exposed to softening global demand and inflation hitting consumers, but economic uncertainties are weighing on the industry.
Porsche plans to increase prices by 4% to 8% in the second half of the year for new models in the US and Europe, CFO Lutz Meschke said. He added the company expects the base prices for its electric vehicles to be 10% to 15% higher than the corresponding internal combustion engine models.
“The expectation when it comes to the BEV transition is we can achieve a very high price premium,” Meschke said.
Porsche, which reiterated its 2023 guidance that margins would stay in a range of 17% to 19%, said its return on car-making was 18.2% in the first quarter.
Carmakers are still getting a boost from pent-up demand after supply-chain issues capped output, though uncertainty about global demand persists. Stellantis' first-quarter sales climbed more than expected thanks to strong vehicle prices and higher shipments of models such as the Jeep Compass.
But pressure on carmakers remains, particularly after Tesla’s decision to cut prices on its EV line-up, a drag on mid-segment electric models. Yet, for luxury carmakers such as Porsche, analysts are watching whether they can raise prices more to offset higher input costs.
“They key thesis on Porsche is they can push pricing in this environment,” said Bernstein analyst Daniel Roeska. “If that’s not happening, that’s the worry.”
The maker of the 911 sports car, which remains majority owned by parent Volkswagen since last year’s listing, is targeting a move further upmarket to battle Ferrari. The German company is planning an all-electric high-performance SUV above its battery Cayenne, slated for about 2026, as part of a plan to boost operating margins to more than 20%.
Porsche’s financial services unit was less immune from the impact of inflation and rising interest rates. In the first quarter, the division saw its operating profit fall to €86m (R1.73bn) from €102m (R2.05bn) on the valuation of interest rate hedges and derivatives, and said the share of leased and financed new cars declined to 42% from 46% last year.
More stories like this are available on bloomberg.com
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