Porsche cuts forecasts after flood at Swiss aluminium alloy supplier

23 July 2024 - 15:16 By Reuters
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Flooding at an unspecified European contractor has hurt supply of aluminium alloy, Porsche said, affecting production of all its models and possibly leading to shutdowns for one or more vehicle series.
Flooding at an unspecified European contractor has hurt supply of aluminium alloy, Porsche said, affecting production of all its models and possibly leading to shutdowns for one or more vehicle series.
Image: Jens Schlueter/Getty Images

Porsche AG cut its sales and profit outlook on Tuesday due to an unexpected aluminium alloy supply shortage, sending the German company's shares down 4% to the bottom of Frankfurt's blue-chip index.

Flooding at an unspecified European contractor has hurt supply of aluminium alloy, the luxury sports car maker said, affecting production of all its models and possibly leading to shutdowns for one or more vehicle series.

The alloy shortage also affected the supply chain of German premium carmaker BMW, but it said it was able to compensate for it and production was not interrupted, declining to give further details.

Porsche said the supplier, which it did not name, has declared force majeure in writing, which means it is unable to meet its contractual obligations due to events outside its control.

Body components made of aluminium are used in all vehicle series manufactured by Porsche, and reliance on the supplier has exposed the company to particular risk. The aluminium alloy shortage adds to other challenges for Porsche in recent months, including software issues, product delays, supply chain problems and a sales slump in China.

“It's been a biblical flood that's wiped away the gains from the IPO,” said Stephen Reitman of Bernstein Research. He was referring to Porsche's initial public offering in September 2022, when shares closed at €82.50 in Germany's second-biggest market debut. Shares were down 4.1% at €69.66 on Tuesday.

Bernstein analysts said the flooding occurred at a Swiss supplier, and would lead to the production loss of at least 10,000-17,400 vehicles in the second half of 2024. At the high end, that figure is equivalent to more than 11% of Porsche's first-half deliveries.

Porsche SE, the holding firm of the Porsche and Piech families that control Volkswagen and holds a blocking minority in Porsche AG, confirmed its 2024 earnings forecast despite the alloy supplier's warning.

US-based Novelis, which delivers to a joint venture producing body parts for cars and co-owned by Porsche, was reported to have shut down a Swiss site due to floods. Novelis did not immediately respond to a request for comment.

Aluminium maker Constellium, which is US listed but headquartered in France, earlier this month warned that its Swiss facilities had been affected by flooding but said it did not supply Porsche from Switzerland.

Both companies name Porsche or firms affiliated to the carmaker among their customers.

Porsche AG now expects sales between €39bn (R779.61bn)and €40bn (R799.71bn) as a result of the flooding in the aluminium supplier's production facility. It previously expected revenue between €40bn and €42bn (R839.70bn).

The company said it was to be expected that the delays in the production and delivery of vehicles would not be fully compensated for in the rest of the year. Porsche now sees a return on sales between 14% and 15% for the year, down from its previous expectation of 15% to 17%.

The company reports first-half results on Wednesday. It faces muted demand in China, driving global deliveries down 7% in the first half of the year. Porsche is also struggling with low electric vehicle sales this year. It watered down its EV ambitions on Monday, citing customer demand and developments in the sector.


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