Shares of the German sportscar maker Porsche slid on Tuesday after the company slashed its full-year revenue forecast. The automaker warned that a snarled supply chain involving aluminum parts from a supplier could limit or even halt production of specific models.
Porsche now forecasts a return on sales between 14% and 15% for the year, down from its previous estimate of around 15% to 17%. The company faces a slowdown in sales in the Chinese market, driving global deliveries down 7% in the first half of the year. The company has been struggling with soft demand for its electric vehicles.
Porsche said in a statement that an unnamed European supplier declared force majeure, which means the delivery of aluminum alloy parts will be disrupted and may cause production lines of certain models to be halted.
"These are expected to last several weeks and may possibly lead to production shutdowns of one or more vehicle series. It is to be expected that the resulting delays in the production and delivery of vehicles will not be fully compensated for in the further course of the financial year," the company wrote in a statement.
Bernstein analysts led by Stephen Reitman told clients that supplier disruption could cause a production loss of at least 10,000-17,400 vehicles in the second half of 2024.
"Whether self-inflicted or genuinely outside its control, these have significantly tarnished what had been an extremely successful IPO in September 2022," Reitman told clients, adding, "Porsche will certainly be closely questioned over its cluster risk management that has left it so vulnerable to one critical supplier."
Shares of Porsche in Frankfurt plunged nearly 8% today, the largest intraday decline since shares began trading in Sept. 2022. Year-to-date, shares are down around 14%. Volkswagen, the majority owner of Porsche, also fell a little more than 2%.
"While the root cause of yesterday's announcement may be outside of Porsche's control, we believe that the cut to FY24 guidance will likely lead to increasing investor questions around Porsche's operations and supply chain," Goldman's George Galliers told clients this AM.
Galliers continued:
"This incident follows challenges with the Cayenne launch in 2023 and on-going supply chain constraints with respect to carbon fiber. We believe that many investors expect Porsche as a company to operationally deliver the quality and reliability which is associated with its cars. We expect some investors to also question the extent to which the lower volumes for FY24 may also reflect softer demand, given Porsche's sales development in China. The company continues to state that globally demand remains strong as, correspondingly, do order books."
The analyst expects Porsche to report "solid numbers" tomorrow: "EBIT of €1.71bn (cons €1.64bn), corresponding to a 16.4% margin (cons 16.0%)."
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He maintains a "Buy" rating on Porsche, with a target of 109 euro 12mo and a 50% upside.
By Zerohedge.com
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