Porsche Shares Decline Amid Supply Chain Challenges

Shares of automaker Porsche experienced a significant drop on Tuesday, closing down 5.09%, following the company's announcement of a revised outlook for 2024. The holding company, Porsche SE, also saw a decline of 2.9%. The adjustments were attributed to a shortage of special aluminium alloys affecting various suppliers, which has prompted Porsche to lower its sales revenue expectations for the upcoming financial year. In a statement, Porsche indicated that it now anticipates sales revenue to range between 39 billion euros ($42.4 billion) and 40 billion euros, a decrease from the previous forecast of 40 billion euros to 42 billion euros. Additionally, the company revised its operating return on sales expectations to between 14% and 15%, down from an earlier estimate of 15% to 17%. The shortage of aluminium alloys, crucial for the production of vehicles with aluminium body components, has been linked to flooding at a key European supplier's facility. Porsche acknowledged that despite implementing immediate countermeasures, the supply shortage is expected to cause production impairments lasting several weeks, potentially leading to shutdowns of one or more vehicle series. Analysts from UBS expressed surprise at the ongoing supply chain issues, noting that while the flooding is significant, supply chains have generally stabilized since the end of the chip crisis, raising concerns about Porsche's supply chain management. Porsche is scheduled to release its financial results for the first half of 2024 on Wednesday, amid growing scrutiny over its operational challenges.