Porsche warns of fall in profitability but hikes dividend on strong 2023 results

Porsche It warned on Tuesday that profitability would fall this year as it launches new models amid tough economic conditions, but raised its dividend amid operating profit growth in 2023.

The German luxury automaker said it expects operating return on sales to be 15% to 17% in 2024, down from 18% profit margins in 2023 and 2022. In the long term, the group targets an operating return on sales of over 20%.

Explaining the more cautious profit outlook, The company cited “Comprehensive refresh of the product range for 2024, global framework conditions, higher depreciation of capitalized development costs and continued investment in the brand and the Porsche ecosystem.”

The company’s shares fell about 2% in early trading.

Porsche will launch four new car series in 2024: Panamera, Macan, Taycan and 911 model series.

“2024 will be the year that Porsche launches more products than any other year in our history,” Chairman Oliver Blume said in a statement.

“We will launch a variety of exciting sports cars that will delight our customers around the world. This will keep us at the forefront for years to come.”

Porsche announced that sales revenue will increase by 7.7% in 2023, reaching 40.53 billion euros (US$44.29 billion), and operating profit will increase by 7.6%, reaching 7.28 billion euros.

As a result, the company proposed a dividend of 2.30 euros per ordinary share, more than double the 2022 dividend of 1 euro per share.

Chief Financial Officer Lutz Meschke said in a statement: “Porsche proved in 2023 that we are resilient, highly profitable and financially sound even in turbulent times. And we benefit from a more balanced sales structure than in the past.”

“Building on this foundation, we will lay the foundations in 2024 for take-off in 2025. Our focus remains on the sustainable success of the company. Our customers and employees, the company and our shareholders will all benefit.”

Full-year sales in 2024 are expected to be between 40 billion and 42 billion euros.

Porsche’s parent company, VolkswagenIt warned last week that sales growth would slow due to weaker economic conditions, increased competition and rising costs.