Porsche warns of production delays due to flooding at aluminum supplier

Porsche is facing significant production delays after floods at a major aluminum supplier in Europe created a substantial supply gap. This is expected to negatively affect not only production volumes but also profit margins and revenue expectations for the German sports car manufacturer in the current year. This latest issue comes at an inopportune time for the Stuttgart-based company, which is already grappling with declining operating margins, reduced sales in China, and a substantial share price drop of 40 percent over the past year. On Tuesday morning, Porsche shares fell by three percent in Frankfurt after the news was made public. A Porsche spokesperson stated that flooding in the southern German regions of Bavaria and Baden-Württemberg led to the shutdown of an aluminum plant, thereby disrupting supply chains. Despite immediate countermeasures, a reduction in production capacity is unavoidable, which cannot be entirely offset in the remainder of the year. As a result, the company now anticipates an operating profit margin of only 14 to 15 percent for the year, down from the originally forecasted 15 to 17 percent. Revenue expectations have also been downgraded, from the previously predicted 40 to 42 billion euros to now 39 to 40 billion euros. Moreover, the flood has negatively impacted the forecasts for electric vehicle production. Electric models will now account for approximately 12 to 13 percent of total deliveries, compared to previous expectations of 13 to 15 percent. Additionally, Porsche now expects a net liquidity margin in the automotive sector – excluding the financing division – of 7 to 8.5 percent, down from the prior estimate of 8.5 to 10.5 percent. This development comes just before the company was due to announce its half-year results. Compounding the issue, parent company Volkswagen recently lowered its own forecasts for the operating profit margin, and the Audi plant in Brussels, employing around 3,000 people, may face closure due to weak demand for electric vehicles.