"The environment has fundamentally changed": Porsche profits plummet due to competition and war

German sports car maker Porsche is facing a drop in profits due to high competition in China, the impact of U.S. duties and a drop in shipments to the Middle East due to the Gulf War. The company has started to cut costs, Reuters reports. At the same time, analysts note: Porsche maintained its forecast for the year, although it had previously lowered it several times. And this is a good sign.

"The environment has fundamentally changed," Porsche Chief Financial Officer Jochen Breckner told analysts after the financial statements were released, Reuters reports. The company said its operating profit fell 22 percent to €595 million in the first quarter.

Porsche's revenue fell 5.2% year-on-year to €8.4 billion, with customer deliveries falling nearly 15% to 60,991 vehicles after Porsche ended production of the 718 Boxster and Cayman models and tax credits in the U.S. were eliminated, Bloomberg writes. Sales could come under even more pressure when Porsche discontinues production of the popular Macan internal combustion engine SUV this summer, the agency notes.

The automaker also reported that its operating return on sales (operating return on sales) in the first three months of 2026 fell to 7.1%, which is in line with the upper end of the company's forecast. In the same period a year earlier, the margin was 8.6%.

At the same time, the company maintained its forecast for 2026: it expects revenue of €35-36 billion and return on sales of 5.5-7.5%. This is important because last year the company revised its forecasts downward four times, Bloomberg notes.

The first-quarter results and maintaining the outlook for the year "give us confidence that we may have finally bottomed out," Bloomberg quoted Citi analyst Harald Hendrikse as saying in a note.

Investors will react to the report of Porsche on Thursday. In trading on Wednesday, April 30, the carmaker's shares on the Frankfurt stock exchange fell by 0.7% to €40.5. The shares have lost 11% since the beginning of the year.

Porsche took a €200 million hit in the first quarter of 2026 in the form of U.S. duty costs, Reuters writes. In addition, Chinese consumers continued to turn away from the German brand in favor of cheaper local alternatives, the agency claims. The war in Iran and related tensions have begun to hit demand in the small but high-margin Middle Eastern market. Porsche said the first-quarter result was in line with its forecast for 2026, but warned that it did not take into account the possible impact of the war in Iran.

"It's still difficult to predict what will happen next," said the company's chief financial officer, Breckner. Sales in the Middle East declined in March and further pressure is expected as conflict curbs demand and disrupts shipping, he said. That said, the region accounts for only 2% of global sales, with sales growth in other markets offsetting the effect in March.

Last year, shipments of Porsche - once the main profit generator for parent VW - declined the most since 2009, and its shares are now worth about half as much as they were when it listed in 2022, Bloomberg notes.

Porsche changed its CEO at the beginning of the year. The new CEO Michael Leiters' plan to reboot the company involves a focus on luxury models that increase profitability, such as the 911, as well as further cost reductions.

"Porsche is looking at every cost item we have, optimizing everything we have, questioning everything we have," Bloomberg quoted Breckner as saying.

This article was AI-translated and verified by a human editor