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Investing.com -- Shares of Porsche AG (ETR:P911_p) traded lower on Wednesday after the company cut its full-year operating margin forecast and reported €900 million in extraordinary second-quarter expenses tied to battery operations and trade tariffs.
The revised margin guidance now stands at 5% to 7%, down from a previous range of 6.5% to 8.5%.
The updated outlook factors in a full-year tariff impact, while earlier guidance had included only two months.
The German automobile manufacturer kept its full-year sales forecast unchanged at €37 billion to €38 billion, broadly in line with analysts’ expectations of €37.3 billion.
Second-quarter group revenue dropped 11% year-over-year to €9.3 billion, falling just short of the €9.5 billion consensus.
Group EBIT came in at €245 million, or a 2.6% margin, exceeding analyst expectations of €193 million and a 2.0% margin.
Automotive EBIT totaled €154 million on €8.32 billion in revenue, producing a 1.9% margin.
Analysts had forecast €201 million in EBIT on €8.54 billion in revenue for a 2.3% margin.
The luxury and high-performance sports cars maker, said operating profit would have reached €1.1 billion with a 12.7% margin if extraordinary battery and tariff-related costs were excluded.
Unit sales dropped 13.4% to 70,400, while deliveries declined 4.3% to 74,900. The average selling price rose 0.6% year-over-year to €118,100.
Porsche cited limited product availability in Europe and a value-over-volume strategy in China as factors behind the decline in volumes.
Research and development expenses also weighed on earnings, with a lower capitalization rate reducing the share of R&D costs deferred.
Net R&D capitalization fell by €43 million, or 0.5% of automotive sales, down from 1.4 percentage points the previous year. The capitalization ratio decreased to 43% from 57% year-over-year.
Automotive net cash flow came in at €196 million, ahead of the €45 million consensus.
The figure includes a €500 million outflow related to tariffs and strategic realignment, both expected to total €1 billion for the full year.
Porsche now forecasts a net cash flow margin of 3% to 5%, implying €1.34 billion at the midpoint, compared with the €1.5 billion consensus.
Working capital accounted for a €332 million outflow in the quarter, while investment spending fell €67 million year-over-year to €668 million.
Porsche’s automotive net liquidity stood at €6.2 billion at the end of the quarter, down €2.5 billion sequentially, following a €2.1 billion dividend payment.