Porsche SE (POAHY) Withdraws Earnings Forecast Amid Anticipated Impairment Losses

Porsche Automobil Holding SE (Porsche SE) has announced the withdrawal of its 2024 earnings forecast following expectations of significant non-cash impairment losses on its investments in Volkswagen AG and Porsche AG. This development stems from a lack of finalized corporate planning data from these entities, compelling Porsche SE to rely on external analyst expectations for its impairment tests.

Impacts and Revised Expectations

Porsche SE indicated that its impairment tests, conducted under accounting standards, are likely to result in substantial write-downs. The company now anticipates impairment losses of between 7 billion euros and 20 billion euros for its investment in Volkswagen AG and between 1 billion euros and 2 billion euros for its investment in Porsche AG.

These impairments are expected to render Porsche SE's group result after tax for 2024 significantly negative, prompting the withdrawal of its prior earnings guidance of 2.4 billion euros to 4.4 billion euros for the fiscal year.

Despite the write-downs, the company stated that the values in use for its investments in both Volkswagen AG and Porsche AG are expected to remain substantially higher than their current stock market values.

Dividend and Debt Forecasts Remain Unchanged

While the impairment losses are expected to impact Porsche SE’s consolidated financial statements, they will have differing effects under German commercial law.

The anticipated impairment loss related to Porsche AG is likely to influence Porsche SE’s annual financial statements under German commercial law, albeit to a lesser degree. Importantly, Porsche SE has reaffirmed its commitment to distributing a dividend for the 2024 financial year, maintaining a degree of stability for shareholders.

Additionally, Porsche SE reiterated its forecast for group net debt, which is expected to range between 5.0 billion euros and 5.5 billion euros as of December 31, 2024.

Strategic Implications and Market Sentiment

The delay in corporate planning data from Volkswagen AG and Porsche AG underscores the challenges in forecasting amid dynamic market conditions. For Porsche SE, this lack of clarity necessitates reliance on external data, heightening the risk of further adjustments to financial metrics in future reporting periods.

The anticipated impairments also raise questions about the outlook for Volkswagen AG and Porsche AG, both of which play critical roles in Porsche SE's portfolio. With Volkswagen AG undergoing a significant transformation toward electric and digital mobility and Porsche AG continuing to leverage its brand strength in the luxury vehicle segment, the ability of these entities to deliver robust long-term performance remains a central consideration.

Conclusion

Porsche SE's withdrawal of its earnings forecast reflects the material impact of anticipated impairment losses on its financial outlook. While the company maintains its dividend commitment and net debt guidance, the substantial write-downs highlight the challenges posed by external market conditions and reliance on investments in complex, evolving industries.

Investors will closely monitor further developments, particularly as new corporate plans emerge from Volkswagen AG and Porsche AG, to assess the broader implications for Porsche SE’s valuation and strategic positioning.