Porsche Automobil Holding SE

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the analyst and investor call regarding the Porsche AG Q1 2025 results. This call is being hosted by Dr. Jochen Brechner, member of the Executive Board for Finance and IT. During the intro statement at the beginning of our call, all participants have been disanonymized. After the intro, we will jump to the Q&A session. Anyone who wishes to ask a question may press star and one. At this time, it's my pleasure to hand over to Björn Scheib, Head of Investor Relations. Please go ahead, sir.

So, thank you very much and welcome to our analyst and investors call on the first quarter of 2025. My name is Björn Scheib and I'm the Head of Investor Relations here at Porsche AG. With me is Jochen Bregner, member of the Executive Board for Finance and IT and Jochen will now give you an update on our first quarter, our strategy and the outlook for the fiscal year 2025. Before we begin, let me remind you that any forward-looking statement to be made during this intro statement is subject to the risks and uncertainties mentioned in the Safe Harbor Statement included in the Porsche materials online. This call will be also governed by this language. And with that, Jochen, I hand over to you.

Thank you and thank you for joining us for our Analysts and Investors Q1 2025 call. As you have seen in our statement yesterday evening, we keep resolutely pushing ahead with intensifying our extensive strategic rescaling and recalibration measures. At the same time, our business performance is continued to be impacted by the increasing economic and geopolitical challenges, as well as further deteriorating BEV transformation in the luxury segment. As a result, we have decided upon further measures. As a result of the slower ramp-up of electromobility, we decided a strategic realignment of battery activities. Also, Porsche adjusted its value-oriented supply management worldwide due to increasing challenges caused by geopolitical conditions. The introduction of US import tariffs leads to negative impacts for the month of April and May 2025, which are included in the adjusted forecast. Before we come to the outlook and more details, let's take a look at our Q1 results and start with our sales development. In the first three months of 2025, Porsche AG delivered slightly above 71,000 vehicles to customers. On wholesale level, we sold 65,000 vehicles. This corresponds to a sales decrease of 8.4% compared to the same period a year earlier. The Macan developed significantly positively and is the best-selling model series with 22,000 vehicles. Of these, 14,000 were the new all-electric Macan. Second in the row is the Cayenne with 18,000 units sold. The sales performance of Cayenne, the 911 and the 718 in the first three months was mainly attributable to a base effect against last year and limited model availability in Europe because of cybersecurity regulations. On a regional basis, Porsche counteracted the decline in sales in China with an increased focus on the other regions. The share of China sales in Q125 was 12%. Overall, our global sales footprint has become even more balanced and more resilient. As already discussed on our pre-close call, the demand for the new 911 develops very satisfying, even above expectations, especially for the GTS. Also, the demand for the new electric Macan remains robust. The mix and quality of our order book and sales illustrate that our customers appreciate our exclusive product offering and very much make use of the opportunity to personalize their vehicles. As a result, our average sales price on vehicle sales increased in the first three months to 121,000 euros compared to 115,000 last year. Let's now turn to the financial results. The Porsche Group generated revenue of 8.9 billion euros in the first three months of 2025. The cost of sales increased by 300 million euros to 7 billion euros. At 79% of sales revenues, this ratio was around 500 basis points higher than last year. This is mainly due to inflationary effects in our supply chain, higher material costs, also due to the higher BEV share, as well as the regular customer satisfaction initiatives and CO2 measures. We also had to account for higher expensed R&D costs. These were at a function of a significantly decreased capitalization rate from 73% in the previous year to 48% in Q1, as well as higher DNA of capitalized development costs of the past. At 630 million euros, selling expenses were on par with the prior year period. The ratio to sales revenue remained almost constant at 7.1%. Administrative expenses were slightly higher at 510 million euros. The administrative expenses also include a double-digit million amount relating to the adjustments to the company organization. In combination with the lower unit sales, this triggered a very unfavorable fixed cost coverage in the first quarter. Accordingly, the Porsche Group operating profit stood at 762 million euros in the first three months of 2025. The Porsche Group's operating return on sales was 8.6%. The EBIT included 200 million of charges in connection with the strategic realignment. Around half of it is related to our battery activities and around half relates to the organizational changes. As mentioned, strong pricing, mix and individualization almost fully compensated the unit sales decline. As a result, automotive revenues amounted to 7.8 billion euros in Q1. The operating return on sales for automotive was 8.7%. The automotive segment's operating profit in the first three months of 2025 was at 678 million euros. Automotive EBITDA year-to-date was 1.5 billion euros, corresponding to an automotive EBITDA margin of 18%. This year, we have earned an automotive net cash flow of 0.2 billion so far. The net cash flow at the beginning of the year was mainly a function of the following factors. First, lower cash flows from our operating business, which we outlined before. Second, lower capitalized R&D expenses. Inventories increased compared to the end of 2024 due to regular seasonal fluctuations. Third, the continued high spending on the development of our brand and ecosystem. We are investing decisively in our future. products, software and initiatives that will sustainably strengthen Porsche. These special expenses will have a short-term impact on the results of the 2025 financial year. We are consciously accepting this in the interest of Porsche's long-term success. In doing so, we are generally relying on our proven and successful Porsche strategy. We have further developed this strategy extensively over the past year in order to adapt it to the changed framework conditions. After all, only a strategy that is regularly and pragmatically adapted will be successful in the long term. This allows us to respond to the new situation in the markets with the greatest possible flexibility. Financial services revenue amounted to 1.1 billion in the first quarter. The operating profit of the financial services segment was 67 million euros. Overall, the credit quality of our financial services book is unchanged and very strong. At the end of March, our automotive net liquidity was at 8.7 billion euros. Now let's move on to the outlook for 2025. Yesterday, Porsche decided to adjust the forecast for the financial year 2025, in particular due to special effects. For the financial year 2025, the following figures are now expected. A sales revenue between 37 and 38 billion, a return on sales between 6.5% and 8.5%, an automotive net cash flow margin between 4% and 6%, an automotive EBITDA margin between 16.5% and 18.5%, and an automotive BEV share between 20% and 22%. As a result of the slower ramp of electromobility, Porsche decided a strategic realignment of battery activities. The previous plans to expand the production of high-performance batteries by Salesforce Group, a 100% subsidiary of Porsche, will not be pursued independently in the future. As a result of this, and due to negative impacts from other battery activities, the amount of special expenses in the financial year 2025 will in total increase from 0.8 billion to 1.3 billion, which will affect results. Beside the 700 million euros attributable to the battery-related activities, around 300 million euros of this burden are related to product, exclusive and software. The remaining 300 million euros are related to the organizational changes, which also cover the announced workforce measures. In addition, Porsche has adjusted its value-oriented supply management worldwide due to increasing challenges caused by geopolitical conditions. This applies in particular to the Chinese market, where the continued challenging market conditions and declining demand in the all-electric luxury segment will affect development in the financial year 2025. Irrespective of this, we remain committed to value-oriented sales with the aim of balancing supply and demand. Further additional costs with regard to suppliers also contribute to the subdued forecast, which over proportionally affects the automotive net cash flow margin. The introduction of US import tariffs leads to negative impacts for the month of April and May 2025, which are included in the adjustment forecast. However, the adjusted forecast does not take into account further effects of the introduction of US import tariffs. Currently, it is not yet possible to make a reliable assessment to the effects for the full financial year. These extensive measures have been initiated to strengthen the company's financial resilience and profitability. In the forecast for the financial year 2025, it is also assumed that the situation in the supply chain will remain challenging and that additional costs in the supplier area must be expected. This is due to individual delivery delays, fluctuations in the numbers of units and possible insolvencies. In addition, we expect significantly higher expend R&D resulting from a higher R&D budget, a lower capitalization rate and higher DNA on capitalized R&D due to our product and strategic measures. In the long term, we at Porsche are pursuing higher ambitions. Let's look ahead to the current and upcoming years. We will be strengthening our brand core with emotional combustion engine vehicles. Last week in Shanghai, we presented the 911 Spirit 70 with a base price above 240,000 euros in Germany. Alongside additional product approaches in the core segment of two-door sports cars, we will be expanding the 911 range with a model that will raise the bar even higher. Our fans will be delighted. Regardless of the type of drivetrain, at Porsche we fulfill our customers' dreams and wishes, no matter how individual they may be. Porsche already offers almost infinite possibilities for individualization. Our range extends from the selection of individual interior and exterior options to completely customized one-offs. Before we come to the end, one more statement on our dividend payment. The executive and supervisory board have proposed to the annual general meeting an unchanged dividend payment of 2.1 billion euros for the financial year 2024. That's 2.30 euros per ordinary share and 2.31 per preferred share. The dividend will be paid out in the days following our virtual annual meeting on Friday, May 26 this year. As we want our shareholders to participate in our future earnings, Porsche intends to pay an annual dividend of around 50% of IFRS group earnings post-tax also in the future. Furthermore, we will host our Capital Markets Day on September 17th. At this event, we will provide you with an update on our strategic realignment initiatives. Being Porsche, and we fully understand and share your passion, we might also give you the chance to experience our highly attractive products. So thank you for your attention. And I'm looking forward to your questions.