Flooding in Alu-Werk interrupts Porsche-production
On Wednesday, Porsche presents its financial report for the first half of the year. It is already clear that the forecast for the entire year will be lower than expected: A major supplier reports a flooded production site. Porsche therefore lacks essential parts.
The sports car manufacturer Porsche must correct its annual forecast downwards due to supply issues with aluminum alloys. As the DAX company announced in the night, the flooding of a production site of a important European supplier has led to significant shortages of special aluminum alloys.
The supplier informed its customers about the occurrence of a Force Majeure event. At Porsche, aluminum-made body parts are affected, which are used in all produced vehicle series. Therefore, Porsche expects production disruptions for several weeks, which could lead to the standstill of individual or several model series, according to the statement further.
Despite initiated countermeasures, the Stuttgart-based company assumes that the production and delivery delays in the current business year cannot be fully compensated. The operational earnings before interest and taxes are now expected to be between 14 and 15 percent, instead of the previously forecasted 15 to 17 percent. The sales are expected to be between 39 and 40 billion Euro, instead of the previously targeted 40 to 42 billion Euro. The interim financial report is expected to be published as planned on July 24, 2024.
Trump and China impact
Recently, the China business had caused greater concerns for Porsche. Speculation about a possible second term of Donald Trump as US President put significant pressure on the Porsche stock price. Stock market analysts pointed to the expectation that Trump could significantly restrict trade between the USA and China.
In the face of the looming trade dispute and declining sales figures, Porsche announced over the weekend that it would exchange its China CEO. Alexander Pollich, previously Managing Director of Porsche Germany, is expected to take over the position from September. Michael Kirsch, who is replacing him, will move to another position within the company. Details about this were left open by Porsche.
Porsche is currently experiencing a significant sales decline in China. At the virtual annual general meeting, Porsche CEO Oliver Blume said the situation remained "extremely challenging." Sales in China have recently fallen by one third. China, with an approximate 20 percent share of total sales, is still one of the most important markets for the company.
The trade conflicts between the USA and China, exacerbated by potential policy decisions from former President Donald Trump, have negatively impacted Porsche's stock price and sales in the region. The flood at a major European supplier's production site, producing essential aluminum alloys for Porsche, has further compounded the issues, potentially leading to production disruptions and delivery delays in the current business year.
