Porsche Aktie

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for participating in the joint Media Analyst and Investor Call regarding Porsche AG's Q1 2026 results. This call will be hosted by Dr. Jochen Breckner, member of the Executive Board for Finance and IT. [Operator Instructions]

At this time, it's my pleasure to hand over to Florian Laudan. Please go ahead, sir.

Good evening, dear colleagues. Welcome to our joint media analyst and investor call on the Porsche AG Quarter 1 2026 results. My name is Florian Laudan. I'm the new Vice President in Communications, Sustainability and Politics, just started beginning of this month.

And it's a great pleasure for me to host this call today together with Bjorn Scheib, our Head of Investor Relations. Joining us is our CFO, Dr. Jochen Breckner. And before Jochen will give you a brief overview of our business performance in the first quarter, I hand it over to Bjorn.

Thank you, Florian. Hello, everybody, also from my side. After the intro statement of Jochen, we will start with questions from the analysts. Then we will switch to the Q&A with the media representatives. You can find further detailed information online in the Porsche newsrooms as well as on the Investor Relations website.

Before we begin, I would like to remind you that all forward-looking statements are subject to the risks and uncertainties mentioned in the safe harbor statement in the online materials.

With that, I hand over to Jochen.

Bjorn, Florian, thank you very much, and also everyone on this call, a very warm welcome to you for joining our Q1 2026 results call. Now as it was announced, let me just quickly start with a few introductory comments to give you some more color and meat around our Q1 financial numbers.

As you know, Porsche starts from a position of strength as one of the world's strongest exclusive brands with iconic products and a highly loyal customer base. However, the environment has fundamentally changed. Heightened competition, geopolitical uncertainty, a slower-than-expected BEV ramp-up and shifting market dynamics require decisive structural action.

Since the beginning of the year, our new CEO, Michael Leiters, together with the Porsche leadership team has conducted a thorough systematic and fact-based review of the company. We have taken an open and honest look at what is working well and where decisive action is required. On this basis, we have already initiated targeted measures. These include: first, value over volume remains nonnegotiable, particularly in China. Despite lower volumes, Porsche continues to prioritize pricing discipline, control dealer inventories and production, balancing demand to protect brand exclusivity and long-term pricing power. Second, a quality-driven and carefully phased ramp-up of the all-electric Cayenne. Third, comprehensive efficiency initiatives such as our Push to Pass program with focus on lowering our breakeven point. And fourth, a sharper focus on our core business.

Our ambition is clear: return Porsche to its full strength. The realignment of Porsche AG is progressing at high speed. The measures weigh on our financials in the short term, but first tangible signs of progress are becoming visible. As part of the strategic focus on Porsche's core business, the Supervisory Boards of Porsche and Volkswagen approved the planned disposals of the equity interest held by the Porsche AG and its subsidiaries in RIMAC Group, Bugatti Rimac and Bugatti International Holding as well as other assets related to these investments in March.

In April, the relevant sale and purchase agreement was signed. Based on current expectations, the transaction is anticipated to close within the next 12 months. Upon completion, Porsche expects a significant cash inflow. The transaction is expected to be predominantly reflected in financial income.

Now let's start with our sales and top line development in the first quarter of 2026. Keeping in mind the current gaps in our product portfolio and market conditions in China, our unit sales are resonating relatively well. As you know, Porsche delivered around 61,000 sports cars in the first quarter to customers. This decline of 15% year-on-year, which was anticipated and reflected in our guidance. Wholesales were around 58,600 units in the first 3 months of this year. This corresponded to a 9.5% decline in sales compared to the prior year.

Let me briefly walk you through the wholesale development by model line and region in the first quarter. The Cayenne once again proved to be our strongest selling model line with sales of around 18,700 units, supported by a solid and well-balanced global demand profile. The 911 also performed very well. It recorded a significant increase in sales and continued strong customer interest.

At the same time, Macan sales declined to around 18,200 units, which was largely expected. This was driven by the strong ramp-up of the fully electric Macan in the prior year period as well as the expiry of tax incentives for electric and hybrid vehicles in the United States end of last year. Panamera volumes were lower, mainly due to temporary supply gap in China ahead of the launch of a China-specific addition starting in April. Wholesales of the 718 Boxster and Cayman were also down. This reflects the discontinued availability since the end of production in October last year. From a regional perspective, growth in North America was offset by declines in China and parts of Europe. In China, in particular, we remain firmly focused on a value-driven sales approach. This means we deliberately balance supply and demand to protect brand exclusivity and long-term pricing power.

Looking ahead, our clear focus in the coming months is the market launch of the fully electric Cayenne. First customer deliveries will start this summer. With regard to the Middle East, unit sales in the region accounted for around 2% of Porsche's global wholesales in 2025. A negative volume impact in the region in March was offset by other markets globally as Porsche continues to benefit from its well-balanced global sales structure. Given the ongoing disruption to vehicle logistics into the region and currently skewed dealer traffic due to the conflict, we have to expect a further temporary volume impact. We are closely monitoring developments.

Overall, Porsche's global sales remain well balanced across key regions. This underlines the strength of our brand, the appeal of our product portfolio and the resilience of our diversified market presence. Despite the challenging market environment, incoming orders remain robust. This is supported by strong brand reliability, a favorable product mix and consistently high demand for individualization options.

Group revenues of EUR 8.4 billion declined at materially lower rates than wholesales with revenues down 5.2% compared to a 9.5% decrease in wholesale. Automotive revenue per wholesale increased to EUR 126,000, up by EUR 5,000 year-on-year. This again reflects our disciplined pricing, strong product mix and our value over volume strategy.

Now turning to expenses. In the first 3 months of the year, we continue to face inflationary pressure, particularly in material costs, including compensation payments to BEV suppliers. These payments were driven by lower-than-anticipated volumes. In addition, our further investments in product quality and customer satisfaction contributed to ongoing cost headwinds. As we launched numerous new products in recent periods, we again accounted for slightly higher depreciation and amortization of EUR 750 million compared to last year.

Moreover, temporary gaps in our product portfolio weighed on fixed cost absorption. Foreign exchange effects developed unfavorably compared to Q1 2025. In addition, the first quarter, we recorded around EUR 100 million of charges related to our strategic realignment as well as approximately EUR 200 million of increased expenses from the U.S. import tariffs.

On the positive side, our cost base benefited from the continued execution of our Push-to-Pass program once more. This has a clear focus on improving operational performance and cost efficiency. In Q1 2026, we earned a group operating profit of EUR 595 million at operating margin of 7.1% -- turning to cash flow. By the end of the first quarter, Automotive net cash flow increased to EUR 540 million compared to EUR 198 million in the prior year period despite lower earnings.

The net automotive cash flow margin improved significantly to 7%, up from 2.5% a year earlier. This improvement was primarily driven by higher cash inflows from operating activities, disciplined working capital management and lower cash outflows from investing activities in the ongoing business. It is important to note that the automotive net cash flow in the first quarter already reflects extraordinary cash out of around EUR 400 million.

This is primarily related to the first tranche of the Audi license payment and strategic realignment measures. In addition, we incurred Parriage payments of around EUR 200 million in the first quarter. Despite these meaningful cash outflows, the strong net cash flow performance underlines the resilience of our operating cash generation and our disciplined approach to cash and working capital management.

With that, let me turn to the outlook. Despite changed geopolitical and economic conditions, we confirm the guidance for the 2026 financial year as published in our annual and sustainability report. As also mentioned, temporary portfolio effects, notably the runout of the 718 and the phaseout of the ICE Macan production in mid-2026 are fully reflected in our planning.

As a result, retail and wholesale volumes in 2026 are expected to be below 2025 levels, while the share of BEVs will increase also based on the launch of the electric Cayenne. We will continue to manage demand and supply strictly in line with our value over volume strategy. For the current year, we expect a group return on sales of 5.5% to 7.5% and an automotive net cash flow margin of 3% to 5%. The group return on sales guidance includes EUR 800 million to EUR 900 million of extraordinary expenses and an estimated EUR 700 million from U.S. import tariffs, broadly in line with last year.

Automotive net cash flow is expected to reflect extraordinary cash outs of EUR 1.4 billion to EUR 1.5 billion, mainly related to strategic realignment, including the Audi license payment of around EUR 1 billion as well as tariff payments of around EUR 700 million. Given the current uncertainty, a reliable assessment of any potential lasting impact of the Middle East conflict on our business is not possible at this time and has therefore not been factored into the current forecast.

Our increased focus on the core business may also result in further selective adjustments to our portfolio of shareholdings. Potential M&A activities relating to the divestment of noncore shareholdings are not included in the outlook due to their uncertain nature. However, if successfully executed, such transactions could result in one-off effects.

Before concluding, let me briefly address our capital allocation strategy. The proposed dividend of EUR 1.01 per preferred share payable after our Annual General Meeting in June strikes a clear balance between financial flexibility and shareholder reliability. It underscores our confidence in Porsche's long-term earnings power even as we navigate the transformation.

Our strong financial foundation provides resilience and flexibility. A healthy balance sheet, solid liquidity and disciplined capital allocation underpin Porsche's ability to navigate the transformation and to restore compelling margins and cash flows.

Before we come to the Q&A session, let me give you a brief update on our Strategy 2035. Porsche has a solid track record of navigating complex environments. Today, we are managing another phase of macroeconomic and industry-wide challenges, operational discipline. Transformation requires time and execution, but Porsche has all prerequisites firmly in place, a powerful brand, iconic products and strong financial foundations to sustainably restore profitability and long-term value creation.

Strategy 2035 will sharpen Porsche structurally and strategically. With our new strategy, we will combine cost optimization and operational excellence with targeted investments in product offering, customer experience and brand. With this, we will lower our breakeven point, increase our resilience and further strengthen Porsche's positioning as a leading sports car manufacturer. We aim to bring back Porsche to its former strength in a financially and strategically sustainable way.

China and electrification realities are being addressed with realism and discipline. We are recalibrating portfolios, footprints and investments without compromising brand positioning or our value over volume philosophy. Strategy 2035 is approaching its next key milestone. We are working at full speed on a more compelling and more differentiated product offering in the most relevant segments.

Let me also briefly address the discussions around our future package. Management and the Workers Council are currently engaged in a constructive dialogue to jointly shape this initiative. Our shared objective is clear: to enhance Porsche's resilience, flexibility, productivity and agility and thereby reinforce our long-term competitiveness in an increasingly dynamic market environment. All these efforts are fully aligned with our long-term ambition, sustained high-margin growth and resilient profitability. A comprehensive update will be provided at our Capital Markets Day in autumn.

And with that, let's now turn to your questions after a short break. Thank you very much.

Ladies and gentlemen, we will now have a short break. Afterwards, the Q&A session for the analysts and investors.

[Break]

[Operator Instructions] And with that, I hand over again to Bjorn Scheib, Head of Investor Relations. Please go ahead, sir.

Thank you very much. And taking a look at the time, I would highly appreciate your quest. And with this, we start with Tim of Deutsche, who will be followed by Jose of JPMorgan.

Thank you, Jochen. First of all, thank you for agreeing with Mercedes that you would report post close today that made our life definitely easier today. Two questions, very quick.

Firstly, very stable delivery this quarter, pretty much exactly what we all expected of you. We've often spoken of the fact that a premium multiple requires premium execution. Was this an exception, Jochen? Or have you changed something when it comes to the planning and processes and controls that now means you're going to deliver more stability going forward even in this very uncertain world and times?

And secondly, how should we think about seasonality from here? Q2 is traditionally a stronger quarter, at least on an underlying basis. Is anything with respect to the mix derailing that this year? Anything else that you see?

Yes. Tim, thank you very much, and everyone, -- also thanks again for joining this call. And as Bjorn said, we try to focus your question, I try to answer also as crisp and short as I can to give you the details so that we can cover as many questions as possible.

Tim, on your first one, Q1 came in not only for you as expected, only for us. We were steering and managing the company in that direction. We see a significant better performance than we had in the last year, at least on reported numbers. So with a 7.1% return on sales, we see a solid result, as I said, as expected.

And yes, that also comes down to execution, which works out very well and which is not a matter of luck or of coincidence. This is really, I would say, a result of very hard work over the last quarters and months and first effects are coming into place. We will continue to focus on execution, both operationally, but also on our strategic realignment and on the restructuring of the whole company to stabilize further the situation.

Now you were asking about Q2. As you know, we are not really give guidance on several quarters, but let me maybe comment again on the full year. For the full year, as I've said in my introductory comments, we confirm the guidance that we have given, 5.5% to 7.5%. The first quarter sits very well within that guidance corridor rather at the upper end, gives us a bit of a cushion.

For the remainder of the year, we expect a bit more of the extraordinary expenses up to EUR 900 million in the full year. We just had EUR 100 million in the first quarter. So from a seasonality perspective, there's a bit more to come. And also looking at mix, we had a very favorable mix in the first quarter, especially from our 911 with the 911 Turbo S kicking in also in our books for the remainder of the year. We see that ongoing on the 911, but with the full electric Cayenne and with more BEVs also in the BEV share that we expect for the full year, of course, there's also some pressure on margins.

Next in the row will be Jose and Jose will be followed then by Patrick.

Just a couple of questions, please. One, can you talk a little bit about the costs you're taking to reduce the breakeven point and any additional actions you're taking in the second half of the year? Anything you could point out there?

And second, from the Beijing Auto Show and the presentation of the vehicles you've done, can you share any anecdotes with regards to demand, customer reaction and yes, product reactions from customers in the region?

Jose, thank you very much. On the first one, cost work, we are really focusing on our Push to Pass program. And that Push to Pass program, as you probably all know, is focusing on really each and every cost item. And lowering our breakeven point is a key measure within our Strategy 2035 and achieving that two elements are important.

First, reducing expenditures and fixed costs so that the level of costs that we have that need to be digested by our contribution margin is lower than what we had. And secondly, and maybe even more importantly, we want to improve margins on a per unit level based on the material and production costs because if you have better margins, you need less cars to cover the fixed cost that you have. We are focusing on both initiatives heavily. We are targeting each and every cost item that we have. But what we not do is that we will compromise our products.

So especially when it comes to the bill of material, we need to do that wisely, that we have the savings there where the customers do not recognize it and where we need to invest into the car to make the cars real Porsche cars, differentiated cars covering for a price premium, we will invest into that one.

On your second question, reactions on the electric Cayenne, especially in China after the launch of the car in the Chinese market in the Beijing Motor Show, I can say that overall, the Cayenne Electric is, again, a fantastic real Porsche electric car with the genes that you would expect from a Cayenne. You know that a Cayenne Turbo in the overboost mode has more than 1,100 horsepowers in same number, and you can feel that in the car, and you can also safely and conveniently drive it just from one place to the other.

Based on that, it's a great car in China. It was also well received by the media and customer reactions. But having said that, you need to keep in mind that, that car is hitting -- yes, is facing and hitting a market where we see fierce price competition, segments under pressure, and that will be also seen in the sales number once the car hits the market.

Thank you, Jochen. Next in the row will be then Patrick. And after Patrick, we have then Christian.

Can you hear me?

We can hear you.

Perfect. My first one, we're now 2 months into the Middle East crisis. And I wonder how things have evolved over the last few weeks and whether you can share your latest thoughts how the situation will affect your business in the remainder of the year? Is there a demand issue you see in the region? Do you think it can be offset as in Q1 with some reallocation of product to other regions? Or is your bigger concern the input cost side?

You said in the full year disclosure that you have a very high degree of hedging. We heard earlier today from Mercedes that there is a second half headwind to be expected on commodity front. So I'd just be keen to get an update on those two items.

And if I may, on the focus on the noncore business, one asset you had talked about in the past was MHP, I suggest I suppose that's on the list potentially. This is a fully consolidated business. Should we read your comment about the guidance not including any M&A items that this is potentially a charge that might be arising from such a transaction? Or am I misinterpreting you here?

Yes. Patrick, thanks for raising these various topics. Let me start also in the order that you raised the topics and the question. So on Middle East, of course, and that's stating the obvious, we are monitoring the situation.

We are concerned about the situation, and we hope that the solution is find rather sooner than later for the people in the region, but also for the worldwide economy. On the specific effects, we've seen a slowdown in the demand in the region because we do not have the traffic in the showrooms as high as we used to have it and also deliveries from us on the logistics side into the regions are not possible in the way that we used to ship the cars to the market.

So therefore, there's a pressure there. We need to see how long that will last. But having said that, important to understand is that in that specific region, we have around 2% of our worldwide sales volume, and we have the possibility to reallocate volumes also to other markets, depending, of course, on the magnitude and the timing of the conflict as long as it will last.

On the material cost side, first and foremost, and I think that's really the most important part of it is before we talk about cost is the supply in general. And our supply chain is secured. We do not have a lot of specific supplier in that region. Actually, it's just one. And the products we get from that supplier are also secured in the supply chain. So we have no complications in the production yet based on the Middle East situation that we have.

On the cost side, again, we are hedged in most of the materials as good as we can. Also, we have long-term supplier contracts. So short term, we do not have excessive effects there. But again, we monitor the situation. And if it lasts for a longer period, if oil prices stay high, et cetera, of course, there might be effects that we need to take into consideration.

On M&A, first, on the technical effect, yes, MHP is a fully consolidated company. We are 100% shareholder of that company. And if we would sell such a shareholding, that would have different effects than the ones that I've just commented on Bugatti Rimac, which was a minority shareholding. That's correct. Assuming that a potential sale of MHP could result in a charge is something that I do not see. If that would be the case, we would not sell it. So therefore, if we have an updated structure for the MHP shareholders, that would again come with a positive onetime effect.

Next in the row would be then Christian from Goldman. And thereafter, we're going to have Horst from Bank of America.

I'll keep it really short. The first question is just an update on any key conclusions Dr. Leiters has made post his 100-day review ahead of the Capital Markets Day in autumn.

For example, should investors expect any further major decisions ahead of the Capital Markets Day event? And my second question is really, yes, looking -- thinking about the mix over the next 1 or 3 years. Clearly, the 911 Turbo S mix is helping a lot, of course, offset by the phaseout of the Macan and the increased BEV share that was mentioned. Thinking about your Rimac exit, and I'm just wondering, should we -- would it be reasonable to expect more specials or what other levers do you have that could improve mix going forward, if any?

Yes. Christian, thank you very much. Yes, first 100 days are over for Michael, but unfortunately, nothing to communicate yet. Why is that? We are diligently working on the update of the strategy and the structure, and we will communicate the updates in more detail in the Capital Markets Day in autumn. That's still a few months to go, but it's not that long time. So I really unfortunately have to ask for your patience on that one.

Of course, what are we targeting there? And the most important thing that also Michael is looking at is the product strategy. We have some issues that we want to address there. We've talked about that one also in the full year disclosure that we want to target segments rather in the higher end of the portfolio, and we want to sharpen the portfolio and become even more distinct in terms of our brand positioning.

Talking about mix, yes, I think I've commented on that one, the 911 Turbo S helps already in our books. Then we have communicated the -- for the first time, convertible version of the GT3, the SC car, very, very, very well received in the market. That's a car that's also, again, as a product, it's really fun, but also talking here as a CFO of the company, that's also something that I'm really looking forward for that will help us.

Again, as I said, the increasing BEV share put some pressure on our mix in the second half of the year and also ongoing then in what we call the best half '27, '28 before new products kick in and we can increase our performance even further.

Thank you very much. Next in the row, Horst of Bank of America and then Stephen of Bernstein.

I hope you can hear me. I have got two questions. First of all, before I ask my questions, we know now what [ Olcomli ] means when we look at your net cash flow. That's great. Then on the first question on Rimac, maybe you can give some more details.

So first of all, the book value and then the potential closing, does that happen in 2026 or more in 2027? And if you can, maybe an indication on the impact on financial income. The other question that I have is more phasing of wholesale versus retail sales in connection with the Macan phaseout. We see that wholesales were again below retail in Q1. I would expect that to change basically in Q2 and Q3 and Q4 to be the opposite. So where do we end up then in the full year regarding wholesale versus retail sales? It's going to be a year with destocking or this restocking that's accelerating because of the Macan phase out at year-end?

Yes. First on Rimac, Bugatti Rimac and say, the whole Rats group and our investments that we had there. Let me first comment a bit in more general on that one. We've decided to sell our investments in that group because we want to focus on our core business. Take care of the Porsche brand and our products. And when it comes to part of the activities of the broader RIMAC Group from our first VC investment perspective, we achieved what we wanted to achieve with our investments. And therefore, the exit was something that is very well in line with our strategy. Of course, otherwise, you would have not done it.

Now on the financials, the book value of the combined assets, the various shareholdings and also some tangible assets like real estate and historic cars are EUR 441 million in our books. That's a number that you can also see in our balance sheet -- sorry, EUR 411 million that you can see in our books as assets held for sale.

As commented on the MHP, that's something that we expect that, yes, will not be the special effect that you will see once the closing comes into place. Talking about closing, that will take some time. There are some legal issues, antitrust things that need to be checked. So normal procedures will take a couple of months that is not in our control. So therefore, yes, we communicate again on that topic when the closing has taken place.

On the full year, we expect the wholesale numbers being below the retail numbers as you see it in the Q1, mainly coming down to the portfolio effects and the supply structure that we have, as you've already commented on it. With that, taking also the time into consideration and as you know, not commenting too much into details on each and every model line and quarters, I think that gives a good orientation on how we want to steer the full year.

But sorry, a follow-up. So that means Q3 is this boost when the Macan phase out and you produce whatever you can because then the production stops and Q4 is already destocked before production phase out, right?

We produce the ICE Macan until mid-2026, and we stock as much as we can based on also the supplier parts that we have, and then we sell these cars over the months to come. We will even see some sales in some regions in 2027. But of course, a declining trend will then kick in once the supply stops.

And now we move over to Stephen. And after Stephen, we have Henning.

My question actually is build on from your answer about Macan. As you said, as you already communicated, you're stopping production of the Macan ICE in the summer. What opportunities have you had to at least increase production or to actually maximize production up to that date?

Obviously, demand for the ICE Macan has proven to be very resilient, particularly in the U.S. market, particularly versus demand for the BEV. And particularly, I think there's very good demand for the vehicles like the GTS version. So are you able to -- have you been able to maximize at least the ending of this vehicle?

Yes, Stephen, as already discussed in the last question from Horst, we are optimizing the runout of the ICE Macan. The production will be stopped in the summer 2026. And during the last month that we have, we produce as much as we can.

Of course, our capacity is one factor there, but that's not limited. and supplier parts are the other issue. And then based on what we have sold so far and the remaining stock that we have, ICE Macan will be sold in the months to come. As also already said in the last question, we will see sales even into 2027 in some regions, but there's a declining trend. In the United States, the ICE Macan really has a great demand.

So we are also supplying that region with the cars that we produce, and that's even more important based on the fact that the tax incentives on the electric vehicles have been stopped by the U.S. government, but those were USD 7,500 per car, which is a substantial issue. So therefore, there's some pressure on the electric Macan in the United States. And therefore, we provide as many ICE Macans in the United States as we can.

So last -- in the first section of the analyst Q&A will be now from Barclays, Henning and then we move over to the media. Should we have some spare time after the Q&A with the media, then we will see if there are other questions from analysts and investors.

Perhaps one question on the guidance. The wording is a little bit different than what we've seen from everybody else with this, excluding Middle East. And I must say I'm a bit confused and there's a few client questions as well. So if we can just clarify that.

I think, Jochen, you said you do expect a further temporary weakness, yet it's excluded from the guidance. So I just want to make sure you're not intending for this to be some sort of soft management of the top end of the guidance range or something like that. If you could just sort of clarify what you really mean with this wording around the Middle East effect being excluded. That's the first question.

And the second question, perhaps on supplier compensation. You mentioned it briefly in your prepared remarks. Can you just remind us if we're already in a period where the supplier compensations are declining. Can you maybe remind us of the magnitude? Or are the compensation payments sort of stable or increasing because the original budget for the BEVs was still going up. So despite the fact that in timing, they're rolling off, but in size, they were growing as it were. So where are we in this dynamic around the supplier compensation?

Yes, Henning, thanks for raising the first question. So we need to have clarity there. Let me start with the first quarter again. With the war and the conflict in the Middle East region kicking in, we've seen first negative effects in March based on lower demand that we've seen because people are a bit more reluctant in going to a Porsche dealership and ordering a car and also the supply of the cars is not possible in the way that it used to be by the ships.

Now with 2% of our sales volumes in that region in March, we were able to reallocate the volumes and compensate by sales in other regions across the world. If the conflict would be not a temporary one, but would be rather a constant one and long lasting, and we would see huge effect also as effects that are not only sales in the specific regions, which we can partly compensate, but also if we would see spillover effects on a worldwide economy situation, then that would be something that we would need to see how that would affect our Porsche business model. But as of now, as of now, based on the situation that we see, we confirm our guidance, 5.5% to 7.5%, and there is no reason to manage that downwards.

Second question was on supplier compensation. We've covered most of it from a negotiation perspective with the suppliers we had because we have updated our expectations on the electric cars to the level that we see in the market with the cars that are already there, namely the Taycan and also the Macan. And based on that and also from the customer feedback we have, we have quite a good visibility on what we can expect on the Cayenne Electric that we will see this year and also ongoing on the 718 Boxster Cayman, which will be the first real electric sports cars in the market with the right crest on the hood that you would expect for such a car.

So therefore, that's a rather stable situation. However, what you need to keep in mind that settling supplier compensation does not mean that these numbers are not also included in the guidance for the current year and also in our midterm planning because these settlements result in higher material prices to some extent that are then covered by the sale of the car within our contribution margin.

So they're already on the way down or they're stable or they going up?

Yes. I mean that's that would take a bit more time to explain that in detail. We've covered for the effects that we see. Negotiations are going on very well. So we see also positive effects from what our colleagues in the purchase department are achieving there.

And from a P&L perspective, this has been partly one-off effects that you have seen in 2025, especially with the stop of the [ SSB 61 platform ] and the heads and cars that we wanted to build on that platform. And for the other cars, it's really a mixture of things that are already covered and that will be within our margins of the car.

Very good. And with this, I would now love to hand over to Florian.

Okay. Perfect. Thanks, Bjorn. And coming to the second set of questions here. Benjamin [ Wagner ] [indiscernible] you're first with your question.

Can you provide some more insight into the Chinese market? Mercedes announced again today that it will lowering prices in order to remain competitive at all. What is the situation like for you? Which cars will you still be able to sell there and at what prices? And does the new electric Cayenne even have a chance there?

And another question about the cost-cutting programs. Profits in 2025 have dropped due to the cost of these programs and the new strategy. Now Michael Leiters has announced further cost-cutting measures for this year. What will these programs cost? And will you be able to meet your return targets on this basis?

Yes. Benjamin, thanks for the two questions. Let me start with the Chinese market in general, and then let me also give some brief comments on the electric Cayenne. So the Chinese market is a market where we see a fierce price competition and a general fierce competition in all segments, also in the luxury segments for especially imported cars.

So based on that, we see declining volumes from peak volumes that we had a few years ago of above 90,000 units down to 42,000 units in 2025. And we've also said that based on our portfolio and market trends, we expect an even significantly lower volume in 2026, just above 30,000 units. Why is that? Because we follow our volume -- value over volume strategy. We focus on pricing. We focus on our brand equity for long-term success in each and every market and also particularly in China. So we will always -- if the demand is not on a level where it might have been or where it should be, we reduce production, we have the flexibility. We do not have local production with a lot of investments, no joint ventures and these things.

So therefore, we are flexible to that end, and we control the market in that direction, which is important. And then on the Cayenne Electric, that car is, as I've said in the first part of the call, this is a real Porsche. This is insane driving machine and also for Porsche car, rather competitively priced in China at 1.1 million. And therefore, it's specifically positioned, especially for the Chinese market. But with that price point in that segment, you cannot expect really high numbers. This is rather positioning car, which will have some success. And from a media and customer perspective, it was very well received and commented on.

Second question was on cost effects. Of course, we are working on the Push to Pass program, full flat out day by day, scrutinizing each and every cost item that we have, optimizing everything that we have, questioning everything that we have. And we do that because we need to make the company more resilient and flexible and to reduce our breakeven point. I've commented on that one also. That means fixed cost structures, but also variable costs and material costs that need to be optimized.

We've even increased speed on these initiatives with Michael joining the company on Jan 1 because also for him, this is something that he really, really is looking at. And as I said, doing the analysis on where we as a company are standing, improving the cost structures is really key. These programs, as we look at them today, do not come with additional costs as far as we have defined them so far.

If there are additional programs that would change that situation, that might be something that we communicated on the Capital Markets Day. But for the time being, this is really things that we do internally based on processes and structures that we have.

Next in line is [ Sebastian Asch ] from Financial Times.

Just looking at the BEV share in the first quarter, it seems to be slightly lower than what the average was over the past year. You said you're still confident about that increasing overall. I mean, maybe you can break down why it's gone down in the first quarter and also say how it might recover over the next 3?

And then in relation to that, you say you're working on your new 2035 strategy. The direction seems to be very much away from electric mobility and battery vehicles and that puts more emphasis on petrol cars and hybrids, of course. We've seen renewed interest, if anything, in EVs in the European market at least. Do you think that, that direction is still the right one given the developments we've seen and perhaps also rising prices for fossil fuels?

Yes. Sebastian, a quick answer on the BEV share, which is lower in Q1 than we had the numbers in 2025 and which is also lower than the BEV share that we are guiding for. And the main and mere reason for that one is that we have some decreases in demand, especially in the United States on electric cars based on the general trends that we see in the States and also based on the abolishment of the USD 7,500 subsidies that were paid for BEV cars until late in 2025. So that's given some pressures on the BEV share, but it will increase in this year once the electric Cayenne hits the market, which is an addition to our product portfolio and that will add to the, yes, electric sales that we have.

On the second question, more on the strategy side, I mean, we are coming from a strategy where we were targeting 80% of full electric cars by 2030 based on the trends in the market segments that we had seen 3, 4, 5 years ago. And based on that one, we've built our product portfolio. Now given the effect that -- and the fact that the trend into electric mobility is much more differentiated across the regions, just said in the United States, it's really muted these days and not expected to pick up substantially over the next years. Also the special situation in China, we have -- we need to adjust our product portfolio to target the demand that our customers in our segments are looking for.

And therefore, what we've already done to some extent and which we are also further focusing on and pushing forward to is that we have a balanced portfolio where we can offer all three drivetrains, full electric cars, but also the plug-in hybrid versions and combustion cars in the various segments to address the customer demand in the various regions as the customers want to have our cars.

Okay. Thank you. Next in line is [ Rachel Moore ] from Thomson Reuters.

The first one is if you could give some detail on the EUR 900 million in extraordinary costs that you're expecting this year. And I also wanted to ask about the impact of the Middle East conflict on costs for Porsche. Are there any -- are you seeing a rise in cost for raw materials? And are there any raw materials in particular where you're seeing this trend?

Yes. Rachel, the up to EUR 900 million special and extraordinary expenses that we expect for the full year also explained in our full year disclosure a few weeks ago, they tie back to the clusters that we are addressing since a couple of months since we are realigning the strategy and the structures, namely our battery activities, the product measures that we have realigning our product portfolio and also the structural measures we are taking to becoming more lean and cost effective when it comes to workforce and also management structures. These are the effects that we have in our books.

On top of that, we decided to have a launch that is really focusing on quality for the full electric Cayenne. So that car will hit the market on a quality level that you would expect from a Porsche car. Therefore, we had to postpone the launch of the car for a few weeks. It's a few weeks. It's not months or years with other cars in the past. It's a few weeks. Again, that comes back to the execution issue that was raised by Tim in the other call. But it gives us a smaller headwind in 2026. And we also have a charge included in our guidance for the focusing on the core activities that we are following in our portfolio.

On the Middle East situation, I think we had already quite some comments on that one. We are tracking the dynamics in the region. It's difficult to predict what will happen. For the time being, we do not have issues in the supply chain, so we can run the production as we are planning to run it to fulfill the demand in the various regions that we have. cost pressures that we see are mitigated through our hedging strategy and our supplier contracts that are rather long-term contracts. So for the time being, no excessive cost pressure there. But if the conflict would remain and the whole economy worldwide would change, then, of course, things might also change. But for the time being, we look at it as just commented.

Next up is [ Monica Raymond ] from Bloomberg News.

Nice to be here. Can you hear me all right?

Yes.

Wonderful. I have two questions from Mr. Breckner. The first, you've mentioned on the call with analysts some discussions about M&A activities and how that might impact Porsche in the form of one-off charges for the rest of the year. I was wondering, could you comment on whether or not you're actually holding discussions on the sale of MHP or planning to sell MHP?

And then my second question, Mr. Breckner, you said that Porsche is scrutinizing each and every cost item that you have. You're optimizing everything that you have in front of you from the operations side, from your production side, et cetera. As part of those efforts to become leaner, where do you see potential to leverage synergies within the Volkswagen Group? Would you say that there's room to work more closely with Audi, for example?

Yes. Monica, thanks for the two questions. On your first one about our shareholdings, let me just again underline that we, as part of our strategy and our updates in the strategy, are running an initiative that we call focus on the core. We want to reduce complexity, and we want to become even more efficient in our capital allocation, investing into what the Porsche brand stands for, and that's our model portfolio that we have with the 2- and 4-door sports cars.

With that, we are constantly evaluating the full portfolio, and we've commented on the MHP situation last summer, and that's unchanged. We think that an updated shareholder structure from MHP might be beneficial for that incredible company for software and digitalization consulting services. but we are doing cars. So therefore, changes there might be something that we want to look at. But for the time being, no decisions, nothing to communicate on that one.

On your second question on leaner structures and especially on synergies within the Volkswagen Group. That's a very important issue for us. We are part of the Volkswagen Group, and we are in, say, a very positive situation that we can benefit from technologies, from platforms, also from combining purchasing power within the Volkswagen Group, and we do that with various cars.

We share platforms, especially with Audi, especially on the SUVs. But also we are offering our technology to other sister brands in the group. For example, the platform that we have developed and that is our under control for the Panamera is a platform that is also used by Bentley for their 2-door and 4-door cars other than the SUV. So there is a lot of synergies that can be exploited. We do that heavily. That helps us improving our cost structures. But it's really important to add is we always do that to an extent that we can still do a Porsche sports car.

So when we take over a platform from Audi, we never use it one-to-one without any changes. We leave as much unchanged as possible to have the synergies. But if there are items that we need to change to make a Porsche, we do that and invest on top into the platforms because this is really the most important strategic position that we follow a car with a crest of Porsche is a Porsche and it's differentiated from the cars we have from the sister brand.

All right. Looking at the time, let's go to the last question. It's another familiar name, [indiscernible], Thomson Reuters, it's yours.

I was wondering, recently, [ Oliver ] Bloom said in an interview with Manager Magazine that he wants to reduce the production capacity, as I understood it, by EUR 1 million in the whole Volkswagen Group. And I wonder what this means for Porsche as the sales are going further down. I wonder if you can give us any indication where production capacity stands currently? And how far you got in adjusting the cost basis to 250,000 volume per year?

Yes. First, the statements from Oliver is something that we do not comment on. I mean that's for the broader Volkswagen Group. So just let us leave that aside. Talking about Porsche, we've already reduced production capacity based on the flexible model that we have in two dimensions.

Looking at the past, just a few years ago, we were using 4 plants, 2 own plants, one in Stuttgart-Zuffenhausen and the other one in Leipzig. And on top of that, we were running our cars in Bratislava and in Osnabruck. These two plants belong to Volkswagen. Given the output that we need, we have already canceled our contract in Osnabruck. so we are not producing cars there anymore. So that was also a reduction in production capacity.

On top of that, we've also adjusted capacity in our own plants. We communicated that last year that we reduced the workforce, not only in the indirect functions, but also direct workforce personnel, especially temporary workers that we didn't need anymore based on the demand that we have.

So therefore, we have a quite flexible setup that we optimize, of course, year-by-year, but these are the major effects that we already had and have put into place. On top of that, talking about capacity, also a very important part of our strategy these days, but also going forward in terms of expansion is that we see a huge demand in the market for what we call the Sonderwunsch program, individualization of the cars. And we use scarce -- excess capacity that we have in some areas to increase the supply that we have for these parts of our business model.

And the capacity right now stands at how many units?

I mean we have a flexible production network. We can produce the number of cars that we need to have. You've seen in the past that we've sold 320,000 cars that were able to be processed through the factories that we have. But also in this year, where we are down to around 250,000 units more or less, is something that the capacity can take care of. And as I said, we do the optimization for these years where we have less output than in the past.

But now as we have [ Michael Punted ] of the bank tenaciously waiting all the time by the end of this call, and we still have 1 minute left, Michael, this commitment needs to be incentivized. As such, the last question goes to you.

Okay. If I have only one question with regard to China. I see some reports that China is intend to implement an emission regulation in 2028. Will this have any impact on your product offering in China from today's point of view?

Let me answer that in general. We are monitoring emission legislation in all the regions and all the markets that we have. Of course, there are some dynamics. You are aware about the discussions in the European Union about averaging effects about targets in 2030, 2035. Also in the United States under the Trump administration, some things have changed.

And also in China, we react to the regulation that we have. We analyze that. But as of now, we do not see significant impact, but sometimes things change rather fast also in China. You might remember the situation on the luxury tax that was increased or maybe to put it more precisely, but the threshold for the luxury tax was decreased more or less overnight within 48 hours. So these are the situations where you then need to adjust yourselves in the business model as good as we can. But as of now, we are analyzing regulations and react and develop our portfolio in that direction.

Okay. Thank you, Jochen. 19 on the dial, 19:01. So slightly over time. Thank you, Jochen, for answering all the questions. Thank you, Bjorn, for being with me. This was our Q1 disclosure call.

Thanks, everyone, for joining in. Thanks for the participation, and have a nice evening.

Thanks, everyone. Have a nice evening.

Ladies and gentlemen, the call is now over. Thank you for joining, and have a pleasant day. Goodbye.

Hello, and welcome to our analyst and investors conference 2026 of Porsche AG. My name is Björn Scheib, and with me today is our CEO, Dr. Michael Leiters; and our CFO, Dr. Jochen Breckner.

Today, we would love to give you an update on our financial results of the last year and we will give you also an update on our outlook. All materials that we have available, such as the investor's deck or the annual and sustainability report are available right now on the Investors section of the Porsche website.

Before we begin, as you know, we will remind you that any forward-looking statements that we will make during this call are subject to the risks and uncertainties mentioned in the safe harbor statement included in our materials. This intro will also be governed by this language.

With that said, I'd love to hand over to Michael.

Good morning, ladies and gentlemen, and a very warm welcome. Thank you for joining us today for our analyst and investors conference. At the beginning, a few words regarding my background are, I believe, necessary. My professional career has spanned the automotive industry across many companies. My most recent responsibility was as the CEO of McLaren. This job entailed a significant restructuring of our capital structure, a revamp of the organization and the renewed focus on McLaren's product offerings, leading up to the successful launch of several models.

Prior to this, I was the Chief Technology Officer of Ferrari for 8 years. I led the entire research and development, focused capital expenditures and the expansions of the Ferrari's successful product portfolio, which enhanced and sustained the significant margin improvement and a viable shareholder returns.

Before moving to Ferrari, I work at this great company for 13 years in various capacities. These were particularly formative. I learn how a largely manufacturing-based production system can be optimized by efficiency, how processes can be improved to drive profitability and how the introduction of new, highly profitable models can reshape a brand, allowing Porsche to grow volumes while still being perceived as a focused and exclusive manufacturer of sports cars. As such, I am returning to my original home with a determined commitment to restore this amazing company's former glory.

In all humility, my career today has exposed me to numerous challenges and the related adoption of successful principles that I believe will serve me well at Porsche going forward. A clear focus on the customer and on products that truly excite our customers. A strong focus on cost efficiency. This is a hygiene factor for any company regardless of how profitable it is and an excellent team, rich in talent, held together by a clear vision and a strong set of share values.

You can well imagine that over the last 70 days or so, I've worked hard with my team to delve into every detail of our strength and weaknesses, both internally and externally. This comprehensive exercise has allowed us to formulate an initial strategic plan that will be pursued with urgency as the next few months unfold.

I do not wish to minimize the challenges we face, but I do take great confidence and our collective ability to address and tackle the issues we confront head-on. This confidence relies on the quality of our people, the culture and the spirit of the organization. Our technological resources, our superior brand equity and consumer loyalty as well as our strong balance sheet and capital structure. This, together with our willingness to take the hard decisions that are both necessary and vital to address our bloated cost structure across the board, revitalize our product offerings and enhance our revenue opportunities. Our clear priority is to fundamentally realign Porsche. Our focus must be on our customers and their expectations on our products, on our sports cars.

Parallel to the mentioned strategic planning process, our leadership team has systematically analyzed the current situation, and we have also taken immediate action. We have already initiated a number of targeted measures. These include the consistent application of our value-over-volume principle, particularly in the challenging Chinese market, a quality-driven ramp-up of production for the all-electric high end and a sharper focus on our core business. We are determined to render Porsche significantly more financially resilient and better able to withstand external challenges.

We must enhance our profit margins and cash flow generation, as you and many others expect from us, and it is needed to invest in the development of innovative products and to handsomely reward our shareholders. I have no doubt that this can be achieved, but I'm also a realist. It will take time. But rest assured that every effort will be devoted to delivering our objectives as rapidly as possible within the various and obvious constraints that will be inevitable arise.

I will further expand our priorities and strategies going forward shortly. But first, Jochen, our CFO, will review our 2025 results and our outlook for this coming fiscal year. This presentation will also highlight the important steps that the team under the leadership of my predecessor, Oliver Blume has already initiated. Jochen, the floor is yours.

Thank you, Michael, and good morning, everyone. I will now walk you through Porsche's performance in fiscal year 2025.

2025 was an exceptionally challenging year for Porsche. In response, we took decisive action to rescale and recalibrate the business across all key dimensions. As a result, we recognized one-off charges of EUR 3.1 billion. This sum is primarily related to the realignment of our product strategy to the recalibration of our battery activities and to organizational adjustments. These measures weighed on our reported results for the year 2025. There are necessary steps to safeguard Porsche's long-term profitability, resilience and strategic flexibility. Now we are combining these initiatives to develop them further in our strategy 2035.

With that, let me briefly update you on our sales development. Last year, customer deliveries declined significantly. Total deliveries amounted to 279,000 vehicles, representing a year-on-year decrease of 10%. North America remains our largest market with deliveries stable at 86,000 units. In China, including Hong Kong, deliveries declined by 26% to almost 42,000 units. China was, is and will remain an important strategic market for Porsche. At the same time, we are adjusting our footprint to reflect new market realities. This includes streamlining our dealer network and reinforcing our presence in high-demand regions. Accordingly, the planned reduction of our dealer network has been revised from around 100 points of sales to approximately 80 by the end of 2026.

Porsche vehicle sales, the basis of our revenue generation totaled 266,000, down 15% compared to the prior year. Also due to the region-specific supply gaps in the 718 Boxster and Cayman and the combustion engine, Macan. Throughout the year, we deliberately focused on value-oriented sales management. This enabled us to maintain a well-balanced regional mix, while we kept production below both vehicle sales, volumes and customer deliveries. This disciplined approach clearly strengthens Porsche's long-term brand positioning and protects our pricing power.

Now let us take a look at the financial figures. Group revenue reached EUR 36.3 billion in 2025, a 9.5% year-on-year decline. Revenues proved more resilient than volumes, reflecting strong brand strength, a favorable product mix and pricing as well as robust demand for individualization. Auto revenue per vehicle sales increased to 121,000 units, up 4,000 units from the prior year. In addition, revenue in the Financial Services segment increased. Porsche faced broad-based operational and external cost pressure throughout the year. From an operational perspective, 3 key cost drivers stood out. First, persistent inflationary pressure across the supply chain; second, costs related to the slower ramp-up of electric mobility, including supplier compensation; and third, higher expense development costs reflecting lower capitalization levels as well as increased depreciation and amortization. These pressures were significantly mitigated through comprehensive countermeasures under our Push to Pass performance program.

Together with strict spending discipline, these measures contributed to around EUR 1 billion, offsetting the operational cost increases. However, reported results were significantly impacted by onetime charges related to our strategic realignment amounting to EUR 3.1 billion as well as more than EUR 700 million from the U.S. tariffs.

Overall cost of goods sold increased by EUR 1.5 billion year-on-year to EUR 31.2 billion. Group operating profit declined to EUR 413 million, corresponding to an operating return on sales of 1.1%. Excluding onetime charges associated with the strategic realignment and additional U.S. tariffs, our operational performance held up well despite the challenging market geopolitical backdrop.

Let us now turn to the automotive net cash flow. Our net cash flow was underpinned by a robust underlying operating business and by disciplined investment activity in the ongoing business. This is reflected in significantly lower cash outflows from reduced capitalized development costs compared with the prior year. On the other hand, at the same time, automotive net cash flow was impacted by extraordinary outflows of approximately EUR 900 million related to our strategic realignment initiatives. Furthermore, we had tariff-related expenses of around EUR 700 million. As a result, automotive net cash flow declined to EUR 1.5 billion, corresponding to a margin of 4.7%. Excluding onetime charges related to the strategic realignment and the increased U.S. tariffs, underlying automotive net cash flow remains strong. The high cash conversion of our underlying business once again underscores the quality and uniqueness of the Porsche asset.

Let me now turn to our capital allocation and balance sheet development. In line with our disciplined capital allocation framework, CapEx in 2025 totaled EUR 2.1 billion, flat year-on-year, while R&D expenditure declined by approximately 9% to EUR 2.3 billion. As a result of a conservative capitalization rate of 42% and higher depreciation and amortization, Porsche's asset base was reduced by around EUR 1 billion compared to the previous year. With net liquidity of EUR 7.3 billion, Porsche is in a very strong financial position. Our healthy balance sheet provides a solid foundation for the future. And this brings me straight to our dividend strategy. Our objective is to provide our long-term shareholders with a reliable and predictable dividend both this year and in years to come. Against this backdrop, the Executive Board intends to propose a dividend for last year of EUR 1 per ordinary share and EUR 1.01 per preferred share resulting in a payout ratio significantly above our target level of 50%. However, as you know, the final decision on the dividend amount remains subject to approval by the responsible corporate bodies.

With that, let me turn to the outlook. In 2026, Porsche will continue to operate in a quite challenging market environment. In addition, heightened geopolitical uncertainties and headwinds such as U.S. import tariffs and the China's luxury tax continue to affect visibility, cost structures and planning reliability. As a result and reflecting a more selective product offering due to supply constraints, we expect significantly lower vehicle sales this year. This decline is primarily driven by portfolio effects, including the runout of the 718 and the final phase of the ICE Macan. Group revenues in 2026 are expected to range between EUR 35 billion and EUR 36 billion. While revenues will reflect the impact of lower vehicle sales, this will be partially offset by supportive pricing, a stronger 911 mix and a further meaningful increase in the share of battery electric vehicles. As a result, revenue development is expected to outperform the decline in vehicle sales volumes.

Now turning to costs. We continue to expect inflationary pressure, particularly in material costs, among others, driven also by memory chips or compensation payments to BEV suppliers. The latter is driven by lower-than-anticipated volumes. In addition, further investments in product quality and customer satisfaction will add to cost headwinds. As we launched numerous new products in recent periods, we also anticipate a sustained high level of depreciation and amortization. Moreover, the temporary gaps in our product portfolio will continue to weigh on fixed cost absorption. On the positive side, our cost base will benefit from the continued execution of our Push to Pass initiatives. This will have a clear focus on operational performance, working capital discipline and cost efficiency. CO2 regulations and foreign exchange rates are expected to trend negatively versus 2025. We continue to pursue a disciplined hedging strategy with a substantial portion of our 2026 FX exposure already secured.

While this enhances planning certainty and margin protection, euro appreciation remains a headwind through both translation and transaction effects. Our guidance is based on the current EU-U.S. tariff framework and the existing China luxury tax regulation. It further assumes stable geopolitical conditions. The current situation in the Middle East and any further deterioration of the situation could adversely affect supply chains and demand and such potential impacts are not reflected in the current outlook.

We expect a group return on sales of 5.5% to 7.5% and an automotive net cash flow margin of 3% to 5%. Our guidance includes approximately EUR 800 million to EUR 900 million of extraordinary expenses. This reflects additional targeted initiatives taken since the beginning of the year to strengthen the group's long-term resilience and profitability, as outlined earlier by Michael. The group return on sales guidance also includes an estimated EUR 700 million impact from U.S. import tariffs, broadly consistent with last year. Automotive net cash flow for the full year is expected to reflect cash out of around EUR 1.4 billion to EUR 1.5 billion, mainly related to strategic realignment measures, including the Audi license payment of around EUR 1 billion. In addition, we expect tariff payments of around EUR 700 million. Adjusted for the cash outs related to the strategic realignment, the underlying operating automotive net cash flow is expected to be significantly higher than in 2025. Our increased focus on the core business may also result in selective adjustments to our portfolio of shareholdings. Limited additional restructuring costs related to battery activities and other noncore areas are already reflected in our outlook. Potential M&A activities relating to the divestment of noncore shareholdings are not included in the outlook due to their uncertain nature. However, if successfully executed, such transactions could result in one-off cash inflows.

Looking ahead, our capital allocation strategy will continue to prioritize partnerships and licensing over ownership and vertical integration.

While Porsche operates as an independent company, we will continue to benefit from scale effects and the exchange of technologies, procurement and manufacturing assets with the Volkswagen Group across both hardware and software. This approach enhances our agility and strategic flexibility in a fundamentally transformed market environment. As a result of the comprehensive recalibration and strategic refocusing underway, R&D spending is expected to remain broadly in line with 2025 levels. Capital expenditure will be higher year-on-year, driven solely by the previously communicated one-off license payment to Audi of around EUR 1 billion.

Taken together, this disciplined approach to R&D, CapEx and liquidity provides the foundation to navigate current headwinds while preserving financial flexibility.

Despite structural headwinds including U.S. tariffs of around 150 to 200 basis points and adverse FX effects at current exchange rates, Porsche remains committed to its midterm target of a group return on sales of 10% to 15%. Michael will now outline the strategic framework supporting this trajectory.

With that, let me hand over to Michael. Thank you very much.

Thank you, Jochen. As you can see, we are facing major challenges. I would now like to outline at a high level what we are working on and how we intend to address these challenges. The foundation for this is a result to date of a comprehensive situation analysis that is currently underway, we have structured our strategy around 3 pillars.

The first pillar focuses on the brand and our customers. Porsche is one of the most desirable brands in the world. The strength in this value brand, we will further pursue our principle of value over volume. The long-term value retention of our vehicles is more important than short-term unit volumes. This strategy will remain in place even in a challenging market environment. This also applies to China, a market we continue to believe in, however, on a different level. Demand for vehicles with internal combustion engines will continue to offer us potential. In contrast, the BEV market is characterized by intense price competition, which we will not follow for economic and brand-related reasons. Market conditions in the United States have also changed as a result of tariff policies. Despite implemented price adjustments, demand remains solid and we currently see stable market development. Porsche's very essence combines leading luxury and premium sports cars, exclusivity combined with approachability, a unique position that provides us with a golden opportunity to generate strong cash flows, high profit margins and increased returns on our investments. All our actions going forward will be dictated by this key feature of our wonderful company. Crucial for realizing this unique price volume equation are the right products and technologies.

And that brings me to the second pillar. We stand for unique sports cars you want to drive yourself with true Porsche DNA. The 911 is an iconic vehicle that has broken numerous sales records in the high-price segment, most recently in 2025. Other products beyond the 2-door sports cars, such as 911 and 718 have over the past 2 decades, significantly enriched the brand and our portfolio and have been vital to the strong development of our company. At the same time, it is also true that a large number of derivatives have significantly increased complexity, both from the customer perspective and internally. We will, therefore, streamline our future product portfolio and reduce complexity and variance. Additionally, we are evaluating an expansion of our product portfolio in order to grow in higher-margin segments. As a result, we are assessing models and derivatives, both above our current 2 sports -- 2-door sports cars and above the Cayenne. Expanding into these segments allows us to further grow our high-margin personalization program such as Sonderwunsch, thereby strengthening the exclusivity of our brand.

Beside the question of future models, we must also answer the question of the right propulsion technology. With the Taycan, we were a pioneer in electromobility and well ahead of our time. But we are now seeing that market conditions have changed significantly. European customers, in particular, are adopting to the transformation more slowly than expected. Other markets such as U.S. have even created opposing market and regulatory conditions. We are adjusting, therefore, the ramp-up and portfolio of fully electric vehicles, while at the same time, extending the life cycle of our combustion engine and hybrid offerings. We are doing this because we are technology-agnostic and do not simply follow regulations, but above all, aim to meet customer demand. This will enable us to minimize product overlaps and internal cannibalization and thus, increase capital efficiency. As I explained, [indiscernible], high-margin products and technologies are core pillars of our plan. However, rigorous cost discipline is equally critical as the third pillar.

To significantly improve our margin structure, we have to establish an overall competitive cost structure. For our products, we need to reduce both initial investments and product costs. Therefore, we are fundamentally rethinking the development of our sports cars. We are analyzing where we can unlock additional synergies across our models. We are reviewing how we can use platforms and industry solutions more flexibly and make greater use of digital technologies. This explicitly includes the intelligent use of group platforms and modules. We have already demonstrated in the past that we can successfully apply this approach with the Macan and Cayenne. This will, by the way, better help us to reduce time to market. Cost work will also pertain to the organization. A program was already initiated prior to my arrival, which we are now adjusting. We will streamline our leadership structure, reduce hierarchies and cut bureaucracy. Our goal is faster decision-making and consistent execution.

Porsche has a highly motivated and committed team with outstanding talent. However, the organization particularly in indirect functions, has grown disproportionately relative to the development of our business. Under the changed conditions, the previously planned reduction will not be sufficient. Also, our corporate culture must adapt to the new environment. What matters is performance, both in teamwork and on an individual level. This performance culture will apply across all areas of our strategy and will help us to deliver to the highest standards.

Ladies and gentlemen, with Strategy 2035, we are creating the framework to reposition Porsche. It is a comprehensive program to strengthen competitiveness and financial resilience and the foundation for achieving sustainable strong cash flows, solid results and Porsche appropriate margins. Our program will require difficult decisions and measures, but a crisis is also a great opportunity. Porsche has proven that many times in the past. In the end, we will come out stronger. Porsche represents a compelling recovery story. Strategy 2035 will lead to higher resilience in high-priced segments and highly differentiated portfolio, stronger capital efficiency and higher margins. All this will support cash generation and ultimately attractive shareholder returns.

[Foreign Language] that is a core of our brand, a promise, our promise. And now we look forward to your questions. Thank you.

Michael, Jochen, thank you very much. The operator will now outline the instructions for how to put your questions. And after this, we're going to start with the Q&A session.

[Operator Instructions] With that, I hand over again to Björn Scheib. Please go ahead.

Thank you very much. So we're going to start the Q&A session with Tim of Deutsche, and he will be followed by Harald of Citi.

Michael, I think you did strike a very difficult balance today of not wanting to say too much, obviously, but having to say something already. I think that went down quite well, but I still have to question, obviously, a couple of things that you said there. I understand you don't want to reveal a lot of details yet, but can you give us a glimpse into some of your very fundamental thoughts here? I'm thinking specifically does Porsche needs to be smaller, given that you just really set value over volume multiple times. Does a Macan still fit with the sports car positioning in the Sportwagenschmiede and the higher margin ambition that you have? Do you need to leave China? Is that bouncing back again? Some of these questions are obviously very important to all of us to understand. So any opinion that you can voice there would be really interesting.

And then secondly, I guess Jochen this goes to you, but maybe also, Michael, there were some pretty heavy charges on the strategic realignment again in Q4, there's a lot of that planned again for this year. Can you give us any details of what that entails, please? We appreciate that there was a pretty fundamental shift in the powertrain approach. But the total sum of this number is just extremely high particularly as we also need to be able to believe that these are "literally one-timers" as we have now heard it a couple of times already from you guys. Thank you.

Yes. Tim, thank you for recognizing about the level of details that we want to share today. But let me first answer regarding the size of Porsche and how we want to size our company. I have mentioned that we have to go through a cost-cutting program, and this is equal to reduce or this should lead us to reduce our breakeven point, okay? So I think without telling you any number, I think it is clear that Porsche will be, let me call it, more compact than it is today.

Regarding your question to the Macan. Regarding the Macan, I have to say I mentioned the unique positioning of the Porsche brand. And the Porsche brand is characterized by exclusivity and approachability. And I think the Macan is an excellent example how we can realize approachability and realize this unique price volume point. So I think that the Macan is fitting very well in our product portfolio. We have to do it right. But I think if you look at the Macan, the actual -- the current version and also the previous version, we have demonstrated we have proven that the Macan is a real portion.

Regarding China, you are right, this is a very difficult situation in the market. There is a strong price competition, but we have taken very important actions to reduce our dealer network there and to reduce the, let me say, fixed cost level in China. We still believe that Stock China is especially in the higher segments and for internal combustion engines, there is a market at a lower level, but we think there's potential for us. For the rest, we come back to the first part of your question. I think we have to dimension our company in a way that China for us is an opportunity. It's not a risk. So whatever China is doing better than today should be a risk for -- should be an opportunity for us. And we should be capable to sustain and have good margin in our company, even though China is weaker than in the past. Jochen?

Tim, your second question that was on the charges. And indeed, 2025 was a rather special year. We had one-off charges of EUR 3.1 billion in the full year. And again, we have taken the decisions deliberately with all these burdens that we had to give the business model of Porsche a more resilient and robust basis for the future, which is the most important part. We were not running -- never running for short-term profits. We try to optimize the midterm and the long term. Now the EUR 3.1 billion is a rather huge number. I would totally agree there. And let me just give you the analysis on that one again. EUR 1.7 billion, we had special write-offs and costs for the suppliers for the stop of the SSP 61 platform that we've postponed well into the 2030s with battery-related activities that we've updated with burdens of around EUR 700 million. And we are also on top investing into the product portfolio and in the restructuring of our company with another almost EUR 600 million. So this is the EUR 3.1 billion, excluding U.S. tariffs, of course, because they are here to stay.

Looking at 2026, it's a much lower number, but still a relevant one. We've always communicated that around EUR 500 million to EUR 600 million burdens will stay in the current year coming from the initiatives we've started last year. It's a remainder on the battery activities, it's on product strategy and it's on the restructuring and reorganization on the company. On top of that, what we have added and also included in our guidance is another couple -- few couple of hundreds of millions for an even more value over volume-oriented approach, especially in China, where we see even increased price pressure from competitors, and we will not play that game. We will safeguard our price protection and the brand. And on top of that, with the Cayenne E4, the full electric car, we've also deliberately decided that this will be a car that will hit the market in Porsche adequate, best-in-class quality. And therefore, we just postponed the start of production by a few weeks, fixing everything that this car will be the best Porsche you can imagine of, and of course, that gives us some headwinds in the current year. So these are things that will go in the further future, and more or less, say, yes, the comments and the explanation of the rather huge numbers in 2025 and already reduced burdens that we have in the current fiscal year.

Very good. So thank you very much. Next in the row will be Harald of Citi and thereafter, we're going to have José of JPMorgan.

Can you hear me?

Yes, Harald, we can hear you.

Welcome, Mr. Leiters, thank you for hosting us today. We appreciate all your comments. Always with the new CEO, it's always a nice question to ask. What are the surprises that you found? You've highlighted a lot of the challenges and stuff and investors obviously have had a lot of challenges over the last few years, and I think people are very aware of both the EV and the China issues that we have. But where have you been positively and negatively surprised? And then, obviously, related to that, we've had a lot of packages over the last few years. It feels like it has taken quite a long time now. How far in the sort of restructuring and repositioning process do you think Porsche was already when you arrived? And do you think you're going to be able to fix the future strategic direction within at least the 2026 time frame. And hopefully, we can then get to a situation where Porsche can report the much stronger underlying position without exceptionals going forward. So kind of what are the positives and negatives? And do you think you can fix all the strategic decisions in 2026?

Yes. Thank you for your question, Harald. Surprises. So I wouldn't call it surprises, but let me point out the most positive and let me say, the most challenging part. Obviously, I know the company still a little bit from my first 13 years here. And the most positive point for me is the talent I found. I think we have a really strong team and I feel also a lot of energy in the organization. So this is very, very positive. A challenge definitely will be that the company has grown a lot and growth brings a lot of opportunities but also a lot of challenges with it. So you need more organizational constraints. You need more rules. You need more procedures. And I think one of the challenges we have is to reduce significant bureaucracy I found here.

Regarding the restructuring, let me say that the question from Tim before was, they are big numbers. Yes, these are big numbers, but I think that shows you already the dimension of the restructuring that was thought off already. And I have to say these have been right decisions. I appreciate that. But there will be more to do definitely. And I think also that the world around us is still changing. We are living in a very volatile world. And I think Porsche has to do even more to be prepared for the future.

José, the line is open for you. And after José, we're going to take Patrick of UBS.

It's José from JPMorgan. Two questions please. Michael, can you talk about the keys to restore the momentum in the Chinese market? Which vehicles you think are going to be driving demand in China in the short and medium term? And do you think the tech stack that you currently have in the vehicles, is it competitive? Or do you think you need to do further changes to improve it?

And second, to Jochen, can you please comment on CapEx? And why would CapEx come down after 2026, if you are going to go into -- potentially into a product offensive which could broaden the product portfolio and provide additional growth to the company?

Yes. Thank you, José. Yes, I think to the Chinese market, I think we should repeat what we said before. I think definitely, the market is difficult. I think on the internal combustion segment, there is potential for us. It is decreasing, going down, but there are still good margins, and we have a good positioning there. And the market share itself is good where we are in this segment. On the BEV side, the situation is more difficult. And I think for the moment, we have to understand how we can -- we think our -- and rebalance our cost structure and continue to preserve our brand and not participating in this price competition which is going on there. Value over volume is a very serious initiative and principle of us. And I think that is the best we can do for the moment. Definitely, we have also to think can we answer here in this market with products that are more appealing for the Chinese market. But please understand, this is a question we don't want to answer right now here. And obviously, also the execution of such a idea would take more time and it's not tomorrow.

Yes, José, I will take your second question. And maybe just as a quick addition to what Michael just outlined, talking about the tech stack in China. Just to give you 1 example. What we are doing there is that we partner with local R&D experts, and we will launch a completely newly developed -- locally developed with China's speeds, China cost structures or infotainment system in our cars in the second half of the current fiscal year. So this will give also some momentum product-wise.

Now talking about CapEx. As you rightly outlined in 2026, we have a peak in CapEx also compared to 2025, and this really comes down to huge one-off payment to Audi. It's EUR 1 billion, around EUR 1 billion that we expect for the current year. And this is say, a simple sign of our strategy does we really try to be very synergetic within the group. We share platforms, we share modules, we share drivetrains and we share as much as we can to have in a total period as least as possible R&D and CapEx spending. If you take out the EUR 1 billion in 2026, we would have a first drastic reduction in CapEx. And that is the way forward also for the upcoming years where we want to optimize our strategic capital allocation on both actually CapEx and R&D.

Thank you very much. So the next in the row would be then Patrick and Patrick will be followed by Stephen of Bernstein.

I hope you can hear me?

We can hear you.

Michael, if I can just follow up in terms of what is the right size for Porsche in the medium term? I would like to get a little bit more color from you. You're obviously thinking about adding product at the higher end of the spectrum. At the same time, you emphasize exclusivity and accessibility or approachability is equally important. So bearing in mind that we had about 265,000 cars last year. Would you say the future Porsche a few years out with the products in the pipeline being launched is going to be larger or smaller volume-wise? And how important do you think volume is when it comes to these 10% to 15% medium-term margin targets that you still maintain. And if I can follow up on your footprint. How important do you think it is to have a footprint in the U.S. to defend your position there in the market.

And 1 for Jochen, please. It seems like in your 2026 guide, the further strategic decisions that are yet to be taken aren't factored in and could lead to further charges, I guess, both on the head count front as well as, as far as product decisions are concerned. I'm pretty sure you're not going to give us a number today, but I would be interested in terms of the magnitude of these potential additional charges. Could those be equal in size as what we've already seen larger, smaller? Any kind of soft guidance would be appreciated.

Okay. Patrick, thank you for your question. Let me go through it in the sequence you asked. Regarding the size, I don't want to say it's small or bigger, I come to the point of the margin, but I think we have to be leaner. That's for sure. And we are not looking at volume. So I prefer to have high margins and the right margin quality instead of volume. And that means definitely, we are not looking out for more volume. We are looking for margin. The margin is -- we spoke about the Cayenne and you touched on that -- the Macan and you touched on that again. I think to realize higher margins, you have to consider the equation of pricing and volume. So there's naturally a limit regarding the volume we are adding for. And that is -- this equation we will solve. And if there is a car in it, we do the car and we take the volume, but only if we can realize the high margin and the exclusivity of our brand for these products.

Regarding the footprint, I have to tell you that right now this is not on the table. I think this is much more complicated than people normally think because it's not only about the factory and where is the factory. It's also about the supply chain. So this is something we are looking at, we are always analyzing our opportunities. But right now, there is no decision on the table to decide a different footprint from what we have today.

Yes. And on the second one, Patrick, you were asking about additional one-timers for restructuring and strategic realignment. And on that, just let me briefly repeat what we have included in our 2026 margin, it's EUR 500 million to EUR 600 million from the programs that you already know that we've started in 2025, and we've added a few couple of hundreds of million for an even stricter value over volume approach, especially in China, given the market situation there and what I just outlined, the quality-driven launch of the Cayenne Electric. Also, a minor budget, let's say, for the focusing on the core activities that we have with one or the other minority shareholding that we are looking at. On top of that, unfortunately, and I hope you understand that even the soft guidance would be something that I would not be able and willing to give today because we are working on strategy 2035, and all the initiatives Michael outlined or talked about, and we take it from there. We will deliberately decide on everything that is helpful for a robust, resilient and bright future for Porsche. If that would come with one-off charges, we would deliberately take these if it makes sense, if not, not. But as I said today, unfortunately, no orientation that I can give in terms of potential size of such potential initiatives.

Thank you very much. Obviously, this call attracts quite high interest, and we still have a couple of gentlemen in the queue. As such, I would love to ask for your discipline that you limit yourself to 1 question to give all the others, also the opportunity to talk to Michael and to Jochen. So next in a row would be then Stephen. And thereafter, we have Horst.

Steve Reitman from Bernstein. Michael, with your experience after Porsche, Ferrari and McLaren, you worked in smaller, very fast-moving organizations. I'm wondering how you judge now the speed that Porsche can bring to model development. And I think particularly about the B SUV for which you are paying out even EUR 1 billion for the right of use. Given how the need to speed up development processes and bring these to market quicker, do you feel that there's any ways that you can actually accelerate the process and bring this vehicle to market? And then given the fact that you're spending is a very high amount of money, it seems not for right of use. So it seems that there's a lot of Audi development in that PPC platform, obviously already. So again, 3 years to develop basically a top hat for this platform seems a long time. What are your thoughts on that?

So first of all, I think in general, that is not related now to the Macan, you mentioned. But in general, our company can be quicker. And one of the focus we have is to reduce time to market. Obviously, this needs also to be implemented in the organization, and this is some time. So -- but I'm confident that we can have a quick impact on our development process. But I have also to say that the Macan is already for our organization right now, a very quick development timing we have. We have reduced already significantly what we have done. You are mentioning what is the commonality between the Porsche and the Audi car. And I have to tell you, it is very important on the one hand side, to use these commonalities and synergies. On the other hand side, we have to make sure that this is a real Porsche. And this needs some content, some product substance, some technology, which is new on this car -- will be new on these cars and therefore, a certain time, is necessary to come to industrialization and to come to the launch of this product. Let me also underline that the license Jochen was mentioned -- on the license charge is not only for the Macan. This is for several models we are doing together on both sides, Audi with Porsche and Porsche with Audi. So obviously, this is the part we paid for to Audi, but there is more than only 1 model. Yes, I think that was from my side.

I think that was [indiscernible].

Next one would be Horst. And after Horst, we have Christian of Goldman.

I hope you can hear me. It's Horst here from Bank of America. I have got a question around top line growth and revenues. You were saying that your guidance is not included in this Middle East crisis. Do you see already any impact on demand on which models you have got at the moment best order visibility? And Michael, you were saying that volumes are not important for you, value over volume has got priority. So how should we think going forward and about top line growth? My understanding was always that 2028 is a year when the top line growth comes back because new models get launched. Is that still valid? Or is that being pushed out because you may take more model decisions?

I can take the first one, Horst. Thanks for raising the Middle East topic and situation, which we are concerned about, in general, looking at our order intake, order bank, of course, is robust, but also order intake, we do not see any effects yet. It's much too early. And from my perspective, it really depends on how long that conflict will last, hopefully, and we keep our fingers crossed that a solution can be found rather quickly. But as of now, it's too early to say what impact we might see there. In general, order intake is robust, order bank as well, and that is the basis for 2026 revenue and kind of volume guidance that we are commenting on 2026 will be even lower than 2025. But as you were mentioning with the updated product portfolio we are working on, growth will come back volume-wise, but also mix and pricing wise, which is very important and which you should not forget.

Cost. Yes, I said value over volume that doesn't mean I don't care about volume. So please understand both is important, but value is more important than volume, and that is our key driver here. As we mentioned, we will give you details or more details about the product portfolio in autumn. Anyways, I can tell you that the whole picture is that until the new product comes, and that is, as we said before, around '28, we have to bridge this time frame and the most important thing we have to do in this bridging time is cost work -- hard cost work to rescale our company.

Next in the row would be then Christian and thereafter, we have Henning.

I think the key question sort of in the background is always how quickly Porsche can get back to a solid mid-teen margin rather than a medium term, 10% to 15% margin. And in that light, I suppose it's too early to ask you details on that. But presumably, do you think that you'll be able to answer or respond to that in more detail in autumn this year? Or could you give me some color on when we would get more detail on the pathway to a solid 15% margin. That's my first question.

I think autumn is a very good timing for that to have a solid plan and not only to commit to something, but really have the substance and give you also the confidence and us to reach it.

That's great to hear. And then my second question is just going back to your factory footprint, and I think given the tariffs and the currency, it's a valid question despite Porsche's very proud heritage of -- in Zuffenhausen and Germany. The factory footprint question, I suppose, you do have an example of a CKD facility in Kulim, Malaysia, for example, and you do have an ICA or the industrial cooperation agreement with the Volkswagen Group, which you work with, which I think runs through 2040 from memory. And I was just wondering if both on those 2 fronts on the ICA agreement with Volkswagen or on the CKD facility in Kulim, whether those 2 sort of avenues provide you any more flexibility to improve your current margin situation going forward?

So Christian, we are looking at all opportunities. Obviously, we are well aware of the opportunities that are in other countries and other markets. But again, I think it will be -- it will take a lot of time and longer time, so it will take until the autumn to take a decision and have a clearer direction on these things because they are complex. And as I mentioned before, regarding the United States, yes, it looks, let me say, compelling, but it's a huge investment. It takes a lot of time, and there's a lot of, let me say, related things to it, the product portfolio, the supply chain. So give us some time and definitely regarding footprint and competitiveness of our factories, we can update you in autumn.

So next in the row would be Henning and thereafter, we've got Sam. And gentlemen, please remember 1 question only.

It's Henning from Barclays. I'll stick to 1 question. It's on '27 versus '26. I appreciate it's more appropriate to park some of the midterm things for CMD in the autumn. But are you able to give us a bit of direction for '26? Ultimately, what I'm getting is '26 a down year or up or '27 rather set a down year or up year on '26. And especially after volume, if we could I think we're talking magnitude of 10% down in '26. So is it going to go down further in '27?

On the special effect, Jochen, I don't know if we can say they're up or down. I think you don't want to say that given the potential additional effects for portfolio readjustment. But on China specifically, if you could just say what that China charge was and if that would continue or not just the nature of the one-off character of that specifically.

And then supplier compensation. I think that's not part of the special effects that you're singling out. If you could just give us an idea of the trajectory there. What was it in 2025? And what do you think that will be in '26 and then again in '27?

Yes. Henning, thanks for raising a couple of questions, actually. Let me try to answer them as crisp as I can. So first, 2027, it's really too early to talk about 2027. There's so much volatility in the world. And even more importantly, we are working on strategy 2035. We are working an updated plan. And I think as Michael outlined earlier, with the other question, these Capital Markets Day in autumn would be a better point in time to give maybe a first soft guidance, first orientation into 2027 than today. What is clear is we stick to our 10% to 15% midterm margin ambition. That is something that we definitely want to achieve, and for that, the updated product portfolio is key, is the most important lever, and that takes some time in 2027, the huge impact of an updated product portfolio will not be there yet. Now you were talking about a charge in China, just to comment on that one. What we've included in our 2026 guidance is not what I would call the charge on China. It's just a reduction of our supply, given the market situation that we see in the relevant segments, given the situation that we see on the pricing side from competitors, and we are not willing to play that game on the discount side. So therefore, we updated our plan, reduced the volumes in China even a bit further, and that comes with a loss in contribution margin, which we have included in our 2026 numbers. And I think that was that. I hope I have not forgotten something.

The supplier compensation question, if you could.

Okay. supplier compensation. Compensation will go down over time because these compensations came with the updated strategy. The stop of the SSP 61 and also the reduced BEV volume. So these improve over time. On top of that material costs, the BOM initiatives are really at the core of our push-to-pass program. So we are really targeting variable costs, especially material costs over time.

Okay. Now we've got Sam. And after Sam, we've got Mike of HSBC.

Probably more 1 for Jochen. Just on the one-off charges for 2026. Can you give any indication of how they're likely to fall on a quarterly basis through the year? I think you said EUR 500 million to EUR 600 million from previous plan. Are they more sort of equally weighted than maybe, I think, the additional charges which you brought in today, I think some are related to the ramp-up of the Cayenne, would they fall more in the first quarter, maybe second quarter of the year?

Yes. I mean, we are not guiding specific quarters. And therefore, also, I would -- yes, just not given an assumption on what we have in our books, how these play out over the various quarters. But give and take, I would expect a rather even situation throughout the quarters because there are some things that we will see in rather early quarters, other in rather late quarters. Just to give you 1 example, the quality-driven ramp-up of the Cayenne is something that will have additional costs in the rather early quarters, first and second quarter and then at the end of the year. We will miss some of the volumes that we had initially planned. So you can see it's spread out throughout the year. No huge specific peaks, I would accept from today's perspective.

Mike, can you hear us?

Yes, Mike Tyndall from HSBC. A couple of questions -- well, sorry, 1 question. I know the rules. Just the messaging I'm hearing is that we've got to blow the cost base, we need to be leaner and you've also talked about introducing new products in higher-margin segments. I wonder if you can give me some level of comfort in terms of all of that sounds like it's going to require cost. And it doesn't sound like it's necessarily within the current planning. So I know you want to leave this to autumn, but can you give us some sense of the order of magnitude of what those plans are going to cost?

Mike, thanks for that question. And I think we had a rather similar question just a couple of minutes ago. So therefore, I keep it short. It's too early to comment on that one. We've transparently disclosed what we have included in our plan, especially for 2026. We are working on Strategy 2035. We're especially working on organizational and strategic alignments. And if these would come with additional costs and one-timers, we would deliberately decide on these if they make sense for a more robust business model of Porsche and a brighter future for Porsche. If not, we won't do that, but it's really too early to tell whether we will have these and what a potential magnitude would be.

Then can I just sneak in a follow-up, which is when we talk about the higher segment cars or higher-margin segments, are we talking about something like the Mission X? Are we talking about something that is independent of the current lineup? Or are we talking about variance of the current lineup?

Again, please be patient with us, and we will show you at the Capital Markets Day in autumn more information.

Understood. Can't blame me for trying.

No, it's okay.

Thank you very much. Gentlemen, as we have only a couple of minutes left, we would now take Mike of Kepler and would take Anthony. And after this, we would then finish the call. Thank you very much.

Yes, Mike Raab from Kepler here. When it -- I know you're not going to give any details on what potential cost in the future or cash equivalents of that could be on the back of the realignment bed. Let's say, if you really faced a tsunami of realignment cost under Strategy 2035, would you also be willing to sacrifice the dividend for that in a specific year?

Yes. I mean, I commented in my initial introductory comments that we had deliberately decided on a discretionary dividend of EUR 1 for 2025 to be paid out in 2026 if we get final approval by the AGM. And I think that is a clear sign, a positive sign to our shareholders that we take care of total shareholder return. We are, of course, very well aware of our development of our capitalization on the stock market. So therefore, dividends are also key. And we have rather healthy balance sheet with a high net liquidity. So from today's perspective, we want to stick to our dividend policy of distributing 50% of our net earnings. If there are other special years, if there would be other special years, we would look at these and would come up with reasonable decisions as we've done for this year. And also, if you remember last year, we also increased our payout ratio above the 50% with the EUR 2.30 that we had paid out.

Thank you. And last in the row now would be Anthony.

Yes. Anthony Dick from ODDO BHF. Just 1 question on the 718 BEV. So obviously, there's been media reports that the car was under review. I'm assuming, considering there's no further realignment charges today that the car has been maintained. But maybe could you just confirm that and also update us on the industrialization of the car, the time line and also how you're adapting volume expectations to new market demand.

So again, we will comment on the product portfolio in autumn. You are -- we have commented on what we have said today and what is on the balance sheet. So there is no change on that. And I just can share with you that we have tested the whole product portfolio last week, and I have driven several times now, 718. And I can tell you that it is a great car and people are doing a great job working on that. So -- but any addition or amendments to the product portfolio will be in -- will be communicated in autumn.

Michael, Jochen, thank you very much for taking the time this morning. Gentlemen, thank you very much for raising these questions, obviously reflecting the quite strong interest in our company. We very much look forward to see you in context of our upcoming road show or Investor Relations event. And as Michael and Jochen Breckner outlined, you can expect that this company is going to host its Capital Market Day after the summer break. And we will very much look forward to see you soon. Thank you, and goodbye.

Thank you.

Thanks for dialing in.

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for participating in the joint Media Analyst and Investor Call regarding Porsche AG's Q3 2025 results. This call will be hosted by Dr. Jochen Breckner, member of the Executive Board for Finance and IT.

[Operator Instructions] At this time, it's my pleasure to hand over to Dr. Sebastian Rudolph, Vice President, Communications, Sustainability and Politics. Please go ahead.

Yes. Thank you, and hello, everybody, and welcome to our joint media analysts and investors call. We're talking about the results of the first 9 months of 2025 of Porsche AG. And with me today are our CFO, Jochen Breckner; and Bjorn Scheib, our Head of Investor Relations. Jochen will give you a brief overview of our business performance year-to-date, then after a short break, we will hold two Q&A sessions: first, with analysts and investors, then with the media. As always, you can find the press release in the Porsche newsroom. The investors deck and the quarterly report are available in the Investors section of the Porsche website.

And with this, I hand over to my colleague, Bjorn.

Sebastian, thank you very much. Good evening also from my side. And before we begin, please note that any forward-looking statements during this call are subject to the risks and uncertainties outlined in the safe harbor statement which is included in our materials. This introduction is also governed by this disclaimer.

With this, I hand over now to Jochen.

Bjorn and Sebastian, thank you very much. Also thanks, everyone, for joining this call. Good evening, everyone. Let me walk you through Porsche's performance in the first 9 months of 2025 and the strategic actions we have been taking.

Let's start with the big picture. Porsche continues to build on a strong foundation, a loyal customer base, a compelling and completely refreshed product portfolio and one of the most iconic brands in the world. Keeping in mind the current gaps in our product portfolio, our unit sales are resonating well.

As you've seen in our press release two weeks ago, Porsche reported robust delivery figures with 212,500 vehicles delivered to customers worldwide between Jan and September. Here, the share of electrified vehicles significantly grew to 35.2%.

In Europe, the share even reached 56%. Our region overseas and emerging markets and the USA achieved a new all-time record. North America remains our largest region with 64,000 deliveries and a 5% increase.

Now let's skip from deliveries to vehicle wholesales Here, Porsche sold 198,000 vehicles in the first 9 months. This is a year-on-year decline of 11% with a mixed picture across model lines and regions. The Macan showed strong momentum, becoming the best-selling model with 61,500 units. That's 10% increase year-over-year and includes 33,900 units of the new all-electric Macan. Sales of the Cayenne declined by 22% due to a prior year catch-up effect. The 911 saw a 6% drop linked to stack-up launches of the new generation. The 718 was impacted by limited model availability due to new EU cybersecurity regulations. North America, excluding Mexico, recorded a 6% decline in the first 9 months. This reflected temporarily lower imports after the summer break following high inventory levels at the end of Q2.

China, including Hong Kong, saw a 25% drop. This was driven by ongoing market challenges in the luxury segment, intensified competition and a strategic focus on value-oriented sales. In contrast, our overseas and emerging markets grew by 3% to almost 40,000 units, which demonstrates resilience and growth potential.

Porsche's Global sales remain well balanced across key regions. This underlines the strengths of the brand, the appeal of our product portfolio and the resilience of our diversified market presence. Despite adverse market conditions, incoming orders remain robust. This reflects strong brand desirability and a favorable product mix. Demand for individualization options remains unchanged on a very high level.

In the first 9 months of this year, Porsche generated group revenues of EUR 26.9 billion. This is 6% below the prior year period. The under-proportional and moderate decline was primarily driven by positive pricing, along with higher revenues in the Financial Services segment. This performance underscores the strength and diversification of Porsche's business model even in a challenging market environment.

Let's now take a closer look at our expense development in the first 9 months. Total expenses including cost of goods sold, distribution and administrative functions increased by EUR 2.3 billion year-over-year, reaching EUR 27 billion. Despite temporary relief from lower production volumes on cost of goods sold, Porsche's broad-based cost increases driven by several structural and external factors. These are the persistent inflationary pressure across the supply chain. A significant increase in R&D expenses, primarily due to reduced capitalization and higher depreciation and amortization, geopolitical challenges beyond our control, most notably the U.S. import tariffs and significant costs associated with our strategic transformation initiatives.

To counterbalance these headwinds, our comprehensive profitability program Push-to-Pass delivered targeted efficiency improvements. This initiative reflects Porsche's disciplined execution and long-term commitment to innovation, regulatory preparedness and cost resilience in an inflationary environment.

Nevertheless, group operating profit declined to EUR 40 million. This corresponds to an operating return on sales of 0.2%, a result that clearly falls short of our expectations. It is important to note, however, that this figure includes substantial extraordinary charges. Year-to-date, Porsche recognized approximately EUR 2.7 billion in extraordinary expenses related to its strategic realignment, portfolio adoptions and battery activities. In addition, tariff-related costs imposed a burden over EUR 500 million, which further impacted profitability. These charges also had a significant impact on the automotive segment, which reported a year-to-date operating loss of EUR 200 million.

Let me emphasize, excluding the extraordinary effects from the strategic realignment and the U.S. import tariffs, the underlying performance of the automotive segment remains robust. This strength is driven by favorable pricing, the successful execution of our Push-to- Pass initiatives and a temporarily favorable foreign exchange and quality environment. Reflecting the operational strength of our ongoing business, Porsche's automotive net cash flow increased to EUR 1.3 billion by the end of the third quarter of this year, up from EUR 1.2 billion in the prior year period. This corresponds to a net cash flow margin of 5.6% compared to 4.8% a year earlier.

This also highlights our continued focus on disciplined spending and effective working capital management. The strong cash flow performance in Q3 was supported by disciplined investment and spending practices as well as rigorous working capital management.

Notably, based on our value-oriented production approach, we achieved a significant reduction in temporarily elevated inventories in the United States and China, which had built up by the end of Q2. Year-to-date, automotive net cash flow also reflects extraordinary outflows of approximately EUR 900 million. These are primarily related to our strategic realignment initiatives and tariff-related expenses.

With that, let me turn to the outlook. We plan to continue our model offensive and customer-focused product strategy. Porsche remains well positioned from both a product and pricing perspective. Our core assumptions regarding unit sales, supply chain stability and cost trends remain unchanged. Recent news flows underline that global supply chains are expected to remain volatile.

The supply bottlenecks at the Dutch chip manufacturer and Nexperia continue for the time being to have no impact on production at Porsche. The Dutch company, Nexperia is not a direct supplier of the Volkswagen Group. However, some Nexperia components are used in vehicle parts with which also Porsche is supplied by its direct suppliers. The Volkswagen Group is currently examining alternative sourcing options in order to minimize possible effects on the supply chain. The company is also in close contact with potential suppliers in this regard. Porsche has also set up a task force.

In light of the EU, U.S. agreement on import tariffs, our forecast for the full year reflects the 15% U.S. import duty effective August 1. We are proactively implementing mitigation measures such as targeted pricing adjustments to preserve margin integrity. Without the product-related portfolio decisions made last month, Porsche would have reaffirmed its original group return on sales outlook from Q2 '25, despite persistent market headwinds. As a result we expect group revenue in the range of EUR 37 million to EUR 38 billion, unchanged from our previous guidance.

At the lower end of the bandwidth, we anticipate a slightly positive group return on sales and an automotive net cash flow margin of 3%. At the upper end of the bandwidth, the group return on sales is expected to reach 2% and an automotive net cash flow margin of 5%. The latter remains well within the range of our initial guidance from the end of April.

The Group's return on sales guidance for full year 2025 reflects approximately EUR 3.1 billion in extraordinary expenses, primarily related to strategic realignment efforts. These include the repositioning of Salesforce Group and adjustments due to recent product portfolio decisions.

Also, the Group's return on sales guidance incorporates a high triple-digit million euro impact from U.S. import tariffs. For the full year, automotive net cash flow margin outlook, we anticipate outflows related to our strategic realignment initiatives alongside tariff-related payments of approximately EUR 1.2 billion. Our cash flow guidance of 3% to 5% for the fiscal year reflects a tariff agreement reached between the EU and U.S. authorities. Assuming reimbursement would be recognized post December 31 only, current expectations support maintaining the guidance unchanged.

We continue to pursue a disciplined currency hedging strategy. For 2025, substantial exposure has already been secured with significant coverage beyond 2025. This approach supports planning reliability and safeguards margin integrity.

Before concluding, let me briefly address our capital allocation strategy. Driven by the new product initiatives aligned with our strategic realignment, we anticipate R&D spending to peak in the current and upcoming fiscal year, followed by a decline. Porsche remains committed to delivering a reliable dividend to our long-term shareholders.

Supported by our strong balance sheet and robust cash flow, the Executive Board currently intends to propose a dividend for fiscal year 2025 that deviates from the medium-term policy. In absolute numbers, the proposed dividend is expected to be significantly lower than last year's payout. But it still would clearly exceed the level implied by our medium-term framework of 50% payout ratio. Final approval remains subject to the relevant corporate bodies.

Porsche reduced its asset base by more than EUR 1 billion in 2025 compared to previous year. This reflects a significantly lower capitalization rates and reduced CapEx year-over-year. Combined with higher depreciation, amortization and impairments. Looking ahead, our capital asset allocation strategy will increasingly emphasize partnerships and licensing over ownership and vertical integration. This shift will not safeguard but enhance our agility and strategic flexibility.

With this, we strive to better seize opportunities in a fundamentally transformed market environment. With a clear focus on involving customer preferences, we are expanding our portfolio to include additional combustion engine and plug-in hybrid models. This strategic move complements our commitment to electrification and ensures a broader offering across key segments.

We also continue to execute our successful Halo strategy, anchored by high-impact lighthouse projects that elevate brand desirability and attract high-value customers. Models such as the Cayenne Turbo GT and the 911 Dakar exemplify our unique blend of performance and lifestyle appeal. They reinforce Porsche's identity in the exclusive segment. The latest result of this strategy, the 911 Turbo S has received strong demand and highly positive feedback from both media and customers. This underscores the enduring strengths of the 911 brand.

Starting in 2028, a more balanced drivetrain offering will further strengthen our market position and support sustainable long-term growth. We remain also committed to electromobility and view decarbonization as a core societal responsibility. We scale our operations and strengthen long-term resilience, we have already taken decisive steps to align our cost structures and strategic footprint with future market realities. We have initiated a comprehensive workforce transformation targeting both direct and indirect roads in order to ensure organizational agility and efficiency. We are accelerating cost efficiency initiatives across the organization to unlock sustainable savings.

In China, we are executing targeting strategic adjustments, including streamlining our dealer network and reinforcing our presence in high-demand regions. Where long-term profitability is no longer viable, we will responsibly reduce our footprint. Originally, we anticipated reducing our dealer network from approximately 150 dealerships down to around 100 by 2027. This target has now been revised downward to around 80 dealerships, reflecting a more focused and profitability driven approach. Additional measures are currently under evaluation.

Let me also briefly address the discussions on our future package. As you are aware, management and the workers council are currently engaged in constructive dialogue to jointly shape this initiative. Our shared objective is to enhance the company's resilience, flexibility and agility. Thereby reinforcing our long-term competitiveness in an increasingly dynamic market environment. Importantly, we do not anticipate any significant extraordinary burdens arising from these negotiations. While all these measures will temporarily impact our financials in 2025, they are strategically sound and essential for long-term success. We are confident that this approach will strengthen our position in a dynamic market and support sustainable value creation.

Porsche has a proven track record of navigating complex environments, and we are currently managing through another period of macro industry by challenges with strategic clarity and operational discipline. With our strategic realignment, we are executing a clear plan designed to strengthen our brand and to sharpen our product offering. Our focus remains on enhancing product portfolio flexibility, strengthening product individuality, increasing exclusivity, and driving desirability across our portfolio. These efforts are aligned with our long-term ambition to position Porsche for sustained high margin growth and Brazilian profitability. We expect 2025 to represent the trough in the current cycle. From 2026 onwards, we anticipate a meaningful recovery in performance supported by positive momentum from our product portfolio and the profitability measures from Push-to- Pass.

And with that, let's turn to your questions. After a short break. Thank you very much.

Ladies and gentlemen, we will now have a short break before starting the Q&A for analysts and investors. Please hold the line.

[Break]

Ladies and gentlemen at this time we will now begin the question and answer session for the analyst and investors. [Operator Instructions]. With that, I hand over again to Bjorn Scheib.

Thank you very much. So we will start the Q&A session for analysts with Tim Rokossa of Deutsche Bank. And then next in the row will be Horst Schneider of Bank of America. Gentlemen, as said, this is a joint media and analyst call. As such, please limit yourself to one or [indiscernible] two questions. Thank you.

This is Tim from Deutsche Bank. I would have 1.5 questions then. So actually pretty good underlying margins and free cash flow numbers, the 12%-13% margin adjusted for one-offs and tariffs. Now tariffs will likely be the new normal, and that also feels like you still need to do some repositioning for the business, fine-tune here and there.

Jochen, when can we expect the burden from one-offs to really go away and think about an underlying matching the stated figure? Is that '26 or already during Q4? And then when we think about Q4 and '26, is there any sound bias you can already give us? You sounded pretty confident in your statements. Can we assume that you can possibly improve as of today from the 5% to 7% EBIT margin range that we had previously? Is there any sort of major one-off still to be expected in Q4?

Tim, thank you very much. And as you said, we were really happy with our operational performance in this year for the first 9 months. And as discussed and just also elaborated on, we had various onetime effects that will go away in the future. As of now, we have posted EUR 2.7 billion until September. And this is expenditure. Your question was about cash, but let me start with that one. EUR 2.7 billion that we've already posted for the effects that you know strategic realignment that we committed at the beginning of the year, also organizational adjustments and then the latest decisions on the updated product portfolio.

So these expenditures are already digested in Q3. We expect additional one-offs and special expenses in Q4 as we've guided for. So when we look at the full fiscal year 2025, we are very confident that we will reach the 0% to 2% profitability guidance corridor. For '26, no major one-off effects are expected. So the expenditures that we need for the strategic realignment for reorganization, the by far biggest part will be in the books in 2025. Now on the cash flow side, again, a very robust net cash flow by the end of Q3. We have optimized working capital. We have reduced CapEx spending as good as we could. And most of the additional expenditures we had for the one-off effects were not cash relevant until the end of September. Some of them are already gone as cash spending since we are talking about depreciation of capitalized R&D expenditures, for example, and other cash effects are expected to be an headwind in 2026.

So again, by the end of this year, cash flow margin will be between 3% and 5% that we've guided for. And having said all that, for the end of 2025, we also will have first effects for the strategic realignment for 2026 pull forward into Q4. 2026, it's too early to guide that year, and we will do that as always, with the official forecast report with the annual press conference. But as I have communicated it earlier and also in this statement, we will be in a substantially better situation on reported numbers. 2025 will be the trough. But having said that, we do not expect on a return on sales level a double-digit performance in 2026. That is something that we will target for the years to come after 2026.

Would you confirm though, your previous statement that a high single-digit margin is possible with everything we know today, obviously, things can still change, right?

You're saying a high single-digit margin is possible for 2026. I would confirm that, yes.

Next in the row is Horst of Bank of America, and he will be followed by Sam from Exane BNP.

Yes, my first main question that is basically on the tariffs again. I think that's an item that surprised me the most on the upside in this release. So you say it was above EUR 500 million in year-to-date, which implies a burden of something like EUR 100 million, maybe EUR 150 million in Q3. I know the tariff came down, but it looks to me that the impact in Q2 was a little bit overstated. And in Q3, it was basically, there was a benefit from kind of tariff provision release maybe. So maybe you can explain that and also the magnitude of that? And is it right basically that the underlying tariff burden is something like EUR 250 million and not EUR 150 million a quarter?

Yes. Tariff situation was quite complex, Horst. So maybe just for everyone in this call to have everyone on the same sheet of paper. We are 27.5% as of April 3, then the reduction to 15% as of August 1. And on that assumption, we are also guiding the full fiscal year, so that tariffs will remain at 15%. Based on quarterly numbers, we communicated with the H1 numbers that we had effects from the U.S. tariffs around EUR 400 million.

And by the end of Q3, cumulative numbers are a bit more than EUR 0.5 billion. And this is a complex math of the varying rates that we had, the 27.5% and the 15%. We did not have the 15% for the full third quarter. That's something that just kicked in by the end of July. So as August 1 and based on these assumptions and facts, by the way, in the actuals, we have made up the tariff numbers. For the full year, we expect a very high 3-digit number. You can do the math. I mean, having the number for the Q2 with the special effects also Q3, lower rate and first pricing mitigation numbers that we have there. So for the full year, we expect the tariff burden to be in the ballpark number, as I've communicated also in the last call. So this is something where we would see around about EUR 0.7 billion for the full fiscal year.

Okay. That's great. Just a small follow-up. Would you be able to comment on price/mix in the third quarter? Because you raised prices, maybe you can give a wrap-up again overview by how much? And are any further price increases coming from here? Or you're basically done now with the tariff pricing?

Yes. We've increased pricing for the new model year 2026 across the board for all regions. So that's an effect that depending on the launch of these new cars already started to kick in, in Q3 and will further strengthen the pricing position throughout the year and then also for 2026. On top of that, we had an additional pricing hike in the United States for first compensation measure for the U.S. tariffs to keep our margins on a, say, decent level and coming through pricing as a mitigating effect on and measure on the tariffs, we are planning to have an additional price increase in the months to come. It's not communicated yet and not decided in full detail yet. So that's something you can watch out for, but we really plan to have a second step there. And the full effect of all these pricing measures will be seen in 2026.

But just as I got it right on this tariff, you said EUR 0.7 billion for the full year, and you have not released provisions in the third quarter. Did I get that right? Or...

No, I said that for the full year, we expect EUR 0.7 billion as a tariff effect. And that includes and is based on the assumptions that we have paid the 27.5% until the end of July and that we have paid and will pay the 15% from August 1 through December 31.

But to be clear, there is no release in any tariff provision or anything as such. Next in the row will be Sam, and he will be followed by Stephen from Bernstein.

Building on Tim's question, frankly, around the reversal of one-offs into next year, which judging from your previous answer was that you basically expect them to fully reverse. What's the risk here that with the new CEO, we get further tilts in the strategy into next year and therefore, further one-offs? Or is the assumption that he's going to come in and then adopt the exact strategy that's already been laid out? That would be my first question. Then a quick question on China. Have you seen any impact of the luxury tax that's come in, in demand in August and September or any prebuy in July before it came in?

Yes. So on your first question, Sam, whether we would expect additional strategic realignment decisions with the new CEO coming to our company on January 1, Michael Leiters -- that's something that we will see when he is here. I mean he's not here yet. He's in a competitive situation with his former company, McLaren. So we have not started discussing professional issues and business issues as of now. Having said that, Michael is a well-known colleague. We've worked together in the past when he worked with Porsche, great collaboration, a great guy, and he knows Porsche very well. He knows our strategy, is from the automotive business. So of course, every time a new CEO joins the company, there will be a programmatic approach to that. But from today's perspective, would be early to expect more one-off expenses from my personal perspective.

I think the major decisions have been made and are suitable and great decisions for the company. Second question was on China. The baseline for the luxury tax has been lowered to CNY 900,000, which affects our portfolio or some part of our portfolio. We have not seen prebuying effects because that new legislation was launched within 48 hours. So no customer had a chance to really run much into prebuying. So that effect was close to 0, I would say.

After the effect, we have conserved prices and protected prices for the existing customers. So demand was on the level that we have seen. And looking forward, the increase of the luxury tax or the lowering of the baseline for the level when the luxury tax kicks in is something that we will monitor. We have looked at our portfolio, and we will come up with strategic decisions on how we can position the one or the other derivative to be in a more competitive situation.

So next in the row will be Stephen of Bernstein, and he will be followed by Anthony of ODDO BHF.

My question is about the U.S. I asked on the last call about your the repeal of the IRA, which and the particular lease credit on your BEVs. Could you comment on what's been happening since then, in particular, the pricing and how you're pricing the leases of the Macan Electric and also the Taycan, which I noticed were some of the better performance in the third quarter, at least at the retail level, indulging by some of the data that we can see here.

Yes. You're referring to the $7,500 tax credit. The electric cars were to -- if they are not bought as cash buying -- this is brought on lease contracts. And of course, the deduction of that effect leads to higher lease rates on a monthly basis. And therefore, our products are getting more expensive than they have been. And there we see some minor effects on the demand side, but the effect is significantly lower than you might have expected that it could be given that USD [ 7,500 ] is a rather big number. But as of now, we are quite happy with how the demand developed also at the higher monthly payments that we have to communicate with our Porsche Financial Services offers we have.

And the second question, could you remind us as well what the time line is for the ending of production of the Macan ICE and also for the Cayman and the Boxster, please, ICE versions?

Yes. We still offer the ICE Macan in the regions out of Europe, out of the European Union. We will produce the car well into 2026, and that car will be on offer throughout 2026 and in some markets, even in 2027 based on final stocking that we will do, exact EOP, end of production date still to be decided and planned in the exact planning, but it will be more or less in the middle of 2026. But as I've said, customers will get their cars also throughout 2026 and some even in 2027. On the Boxster and the Cayman, the end of production is here to come. That will be in October. So we are producing the very last cars these days. And then it's the same situation as with the first Macan, the ICE Macan that customers will receive their products throughout the next month.

Very good. So next then will be Anthony. And after Anthony, we have Michael. And please note in about 5 minutes, then we move over to the press.

Yes. The first one is on just the general kind of margin environment for 2026. So it seems like there's quite a few tailwinds for you, of course, outside of the nonrecurring charges you had in 2025, but you might also be having lower tariff impacts based on that kind of EUR 150 million run rate and also some positive pricing and likely mix also. So I was just wondering what might be preventing you from reaching that double-digit margin in terms of what headwinds should we take into account for 2026?

And then the second one is just a follow-up also on the free cash flow. So you mentioned EUR 1.2 billion of cash out this year for the restructuring and the tariffs. Could you actually maybe break that down between the restructuring and the tariffs? And also what remains in 2026 in terms of what cash out remains on the restructuring? And what kind of reimbursement should we expect for the tariffs?

Yes, a couple of questions. Let me answer it. So first, a question on why do we not expect double-digit return on sales performance in 2026, given the quite robust performance that we've seen if you do the reconciliation with all the one-off effects from 2025. In 2026, based on the substantial improvement that we will expect, we also have some headwinds that we have to take into account. First one is product offering. I've just commented on the ICE Macan and also on the runout of the 982, so the Boxster Cayman car, which will have [ last ] sales based on the production that we had so far. But from a portfolio perspective, we will have additional issues where we do not have supply.

Second is we do not expect China to recover. So given the trend in China and also in some other markets, our assumption is that our sales will be -- unit sales will be lower in 2026 than expected for 2025. Also, from an FX perspective, as I've said, 2025, almost fully hedged. Also in the years to come, we have quite high and substantial hedging ratios, but there are some open positions and also in 2026, first effects will occur where our FX situation is a little bit weaker than it has been in 2025.

And given these effects, we see a huge improvement, really a relevant one single-digit performance in return on sales, but it will take a bit more time to come back to the 2-digit performance. Net cash flow for Q3. So year-to-date Q3 outflows were about almost EUR 900 million. When it comes to U.S. tariffs, that's a bit more than EUR 500 million. And then we had additional spendings on the strategic activities and organizational realignment activities that gives you the number of almost EUR 900 million of special effects on the cash side for the one-offs and U.S. tariffs.

For '26 remaining in terms of disbursements related to the realignment and reimbursements related to the tariffs?

But for 2026, we will have, from our perspective and based on our assumptions, a stable tariff situation of 15% import tariffs to the United States. So we will see that in the full year compared to 2.5% in the first quarter, 27.5% until July and then 15% from August through December. If you do the average for these different quarters in this year, for the next year, you will have a similar number that we expect for the next year. So tariffs, stable situation, 15%, more or less a burden as we have it in this year. And for the strategic realignment, the one-off expenses will be -- the really biggest part will be posted in 2025. So we do not expect material effects in 2026.

Very good. So next then will be Michael, and then we will hand over to our colleagues of the media. And if we would have time at the end of this call, we will see if we can squeeze in the one or the other question.

A couple of quick ones, if I can. Just in regards to China, the work you're doing in China, can you talk about the cost of that? So shrinking from 150 dealers to 100 now to 80, what have you had to pay the dealers to have them walk away from the contracts that you've got with them? That's the first question. So China compensation, if you like.

And then the second question is just around the tariff piece. If I remember rightly, you built inventory in the U.S. on your own books in the first half. Is that the reason why the tariff in the first half looks really high versus what looks to be a very low tariff in Q3 that you were actually burning off that inventory in Q3, which meant the actual tariff impact was smaller?

Yes. Thanks for the questions. On China and the restructuring work that we are doing in the dealer body from 150 to initially 100, and now we're targeting 80 dealers to set up a dealer network that is robust and financially viable and profitable. That's an activity that we are doing in really good cooperation and good talks together with our dealers because they have the same interest in coming up with a business model that works profitably in the Chinese markets as opposed to what we've seen during the last couple of months or years.

That comes with the cost. That's clear. But these costs are not substantial compared to the other effects that we have communicated in terms of strategic realignment and restructuring of the company. If there would have been -- we would have incorporated that into our communication. So I'm not in a position to give you an exact number since we're also in negotiation position with our dealers. But as I said, very constructive talks, joint interest in adopting the -- and joint target in adopting the dealer network, the dealer body, and that's something that we can digest in our profitability in the current year and also in the next year when these actions will happen.

On tariffs, of course, the cars imported by the end of Q2 had a 27.5%. We had to pay based on the import data that we have. And once you release these cars, of course, the tariffs are posted to the cost of goods sold when we reduce the working capital. So you have some effect there. But I think you should look at the tariff situation, as I commented on it on a yearly basis for the full year, EUR 0.7 billion, and that's also a good estimate for the year to come based on then 15% throughout the year.

Before we hand over, may I only clarify one thing. When Jochen talked about lower unit sales next year, we are talking about unit sales to the degree of car sales, wholesales. This is no revenue guidance. This will all come next year, because I already got first questions if this is our revenue guidance. This is no revenue guidance.

Thanks, Bjorn.

Okay. colleagues, then we make a short break and then we're right back with the Q&A for the media.

Ladies and gentlemen, we will now have a short break before beginning the Q&A for the media. Please hold the line.

[Break]

Ladies and gentleman, we will now begin the questions and answer session for the media. [Operator Instructions]. With that, I hand again over to Dr. Sebastian Rudolph. Please go ahead.

Yes. Thank you very much, and welcome back colleagues to the Q&A session for the media. We have limited time. It would be great if you limit your questions to one, if possible. And with this, I would say we start with the Financial Times and Sebastian -- just unmute your mic and the floor is yours.

I wanted to ask with respect to the U.S. tariff resolution last week, which has bought somewhat of a tailwind for U.S. carmakers. How do you feel this impacts your position and the position of European car makers relative to other manufacturers with a manufacturing presence in North America.

Sebastian, thanks for the question. If we got you rightly, you're asking about the U.S. tariffs and changes that you were referring to. So commenting on that one, I'm not aware of any relevant changes, as I've just communicated in the other call. We are planning our assumptions on 15% as persisting and remaining tariffs for cars to be imported. I know that there are some political decisions on the truck business where trucks might be affected, but it's not relevant for us as passenger car manufacturers. So again, we are paying 15% since August 1, and that's our assumption for the end of this year and also for the next year.

The next question goes to Rachel Moore of [ Reuters ]. Please, Rachel.

I wanted to ask if there is an update on the measures that will be required as part of the restructuring. You have the second package of measures currently under negotiation. Can we expect more job cuts? And what's the time line on that?

Rachel, we have started the negotiation on the second package. We call it the future package because that's a package that will really improve the competitiveness of our business model and our sites in Germany. We do that internally. The discussions and negotiations with our workers' council. So we are not in a position yet to communicate anything detailed because it's not agreed and we're not do not want to discuss this in public. We do that on ICE level with the partners from the works council.

But what I can say is that we are targeting significant measures, and you were talking about job positions on that one, I would like to comment that a major part of the future package is not about job positions, but rather on salary levels and additional perks and compensation elements that we have in our current baseline.

Question goes to Stephen Wilmot, Wall Street Journal, Stephen, please.

Question, I just wanted to ask, can you give us any -- beyond the second package that you just talked about, what are you doing internally to reflect the strategic realignment that you've provided for in your financial results. Can you give us any kind of indication of what -- what is going on internally in terms of kind of teams being allocated to hybrids or other kind of projects that reflects the strategic realignment?

Yes. I mean we -- when it comes to our R&D work and our product portfolio work, we have a multi project planning approach and we are staffing the projects along our cycle plan and strategy as the projects come along and needs to be developed. And based on the later decisions that we -- that we would push out the new electric platform and the car projects, the heads, as we call them, that were planned to be on that platform. Of course, we've updated our multi-project planning approach and have redistributed, if I may say so, our colleagues and experts in R&D, but also in other areas of the company from that platform and that car projects into the other ones that we will develop to put our portfolio in a more flexible position starting as of '28.

So that's a bit of a process of change, but it's nothing special in general. We do that regularly because projects come, projects go, projects are finalized. So engineers and all the other colleagues and experts need to be allocated to various tasks. And in with the latest decisions, it has been a little bit bigger than a task to execute it. But in general, that's a daily business, and we are executing that, yes, in a very stringent way, and colleagues are already working on the new cars on the ICE and plug-in hybrid drivetrains that we communicated.

Maybe if I may add one thing. This has nothing to do with the second package. So this is, as I said, a daily work, reallocating experts, engineers resources the second package, the future package we're talking about is more about structural changes.

We have one more question on our list. That's why I repeat. [Operator Instructions]. So with this, Monica, Bloomberg, the floor is yours.

We've heard quite a bit from Mr. Blume already in previous calls about Porsche's intention to expand the [indiscernible] program, and that individualization and sort of higher-margin vehicles will play an important role in Porsche's future strategy. I was wondering if we could hear a bit more color or details on what structural changes or concrete measures are being taken to expand that program? And what would need to be offset for that expansion, specifically in Zuffenhausen physically, if facilities need to be expanded if more people need to be onboarded, et cetera?

Yes, Monica, thanks for that question. The exclusive and [indiscernible] manufacturer, as we call it, business is really key to our strategy is one key pillar for the brand, but also in that part of the business for highly profitable margins. We will expand that business as communicated earlier, and we will do that step-by-step in a very cautious way because in that area of our business model, it's really key that we keep scarcity and keep it as a luxury part of the business. So this is a step-by-step approach year-by-year. We have already increased significantly the capacity and also the output in that area throughout the last years and over the next 2, 3, 5 years until the end of this decade, substantial increases in terms of output will be organized in our operational model.

This will come with additional capacity in that area of our business model, but we are not planning for a substantial additional hires to organize that one. That is something where we -- as I just said in the answer to the other question, our multi-project planning, given the staff and the workforce we have we will organize the increase in capacity in the [ Zonda bunch ] and exclusive manufacturer program. When it comes to assets, buildings, machinery, et cetera, again, our plant in Zuffenhausen is big enough to -- yes, to implement the increases in the Zonda bunch exclusive manufacturers. So there are no significant CapEx expenditures planned to organize that part of the business on the growth path that we've entered.

I would take 2 last questions. The first goes to [ Stuttgarter Zeitung ] then we finish with Dow Jones. So Matthias Schmidt, you go first, Stuttgarter Zeitung -- second, please.

Just one short question. Is the new CEO already involved in the negotiations on the second package?

I just repeat because it was acoustically hard to. It's the upcoming CEO already involved in the negotiations. We're talking about the [indiscernible] package.

Yes. No, he's not. Michael Leiters will join the company on January 1. He's not with the company yet. Decisions have been made that he will join the company. We are looking forward to welcoming and a portion working together with him. But given the situation, competitive situation with also the other company that you used to work for, we are not in discussions in any direct work with him yet. We will start that as of January 1. And given the fact that he's been with Porsche for quite some years. And then afterwards, is a highly respected expert in the automotive industry, we really expect to have a fast start and the kick start in Jan 2026, but no actions so far.

Then we have the last question for today, Markus Klausen, Dow Jones.

One question regarding the analyst call. You said Mr. Breckner, to be 100% sure that next year, Porsche will reach high single-digit return. And then year ahead, 2027, a double-digit return is possible. And is it reasonable to assume that Porsche will once again achieve a return of 80% at some point in the future? Or is it no longer within reach?

Yes. So first, let me confirm that we are expecting high single-digit return on sales next year. That's correct. Second, we've communicated that our ambition is a 10% to 15% profitability, margin and range in the midterm. And whether the midterm starts in 2027 or maybe a bit later, that's something that we still have to see that's 2 years from now, so do not give exact guidance on that one. I can't comment on 2026 -- sorry, on 2027 more precisely. But I think the most important information is high one single-digit margin in 2026, not double digit, and then we take it from there. And as of 2028, the positive effects from our strategic realignment will start to kick in.

Okay. And 18% is within reach in some point in the future? Or is it no longer reachable?

Yes. I mean I just said that we communicated that our ambition is to have a return on sales in the midterm between 10% to 15%. That's a way to go. We have taken the decisions to get there and higher margins would have been even higher than the 10% to 15%. So from today's perspective, I would not confirm a target of 18%. That's why we communicated a range of 10% to 15%.

And as a surprising factor, Jose, you had been quite tenacious patient and weighted in the queue right to the end. This is a sports company that is incentivizing this passion. So that was last in a row is Jose of JPMorgan

Jose, great to hear you, looking forward to your question.

Thank you so much and thank you very much for the opportunity, and apologies to yes, coming the last one here. Simple question, please. As we think about the next 6 months, 12 months, medium term, but a bit more like in '26. I'm sure you're launching new vehicles, right? So which vehicles do you think will drive the momentum in '26? When do you expect Cayenne electric to start helping a bit P&L in that sense.

Yes. From a model availability perspective, Jose, I've already commented on the fact that the 982, the Boxster Cayman is in the runout phase, also the H1 ICE car is still available in some markets out of the -- outside of the European Union in 2026, but that car is also starting its runout phase, but that will take a bit longer than with the Boxster and Cayman.

A positive momentum we can expect from the completely newly developed full electric Cayenne, what we call internally the Cayenne E4 that car is about to be launched in 2026. And that's in addition to the existing Cayenne lineup. So we expect that we will gain some market share in the Cayenne segment then given the fact that we have the ICE plug-in hybrids and also electric cars.

On top of that, we've just launched the very important derivative, the icon in the icon model line. I'm talking about the 911 Turbo S in the 911 model line in the Munich Auto Fair,and that car will be available by the end of this year and, therefore, will give us tailwinds, especially when it comes to margin and also brand and company positioning in 2026. And given all these effects, maybe also combined with a weaker demand in China that we expect will put us in a position to reach the 1-digit profitability margin I've just talked about. And Yes, that's how we look at 2026 from portfolio and also sales unit perspective.

And with this -- both of us say thank you to Bjorn. And for myself, I say thank you to Bjorn as well. And for your colleagues from the media and also analysts and investors for the joint call. Have a good weekend, and see you. Bye-bye.

Thank you, everyone, for joining. Thanks for your questions. Talk soon.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.

Ladies and gentlemen, welcome, and thank you for joining the analyst and investor call regarding the Porsche AG H1 2025 results. This call will be hosted by Dr. Oliver Blume, Chairman of the Executive Board; and Dr. Jochen Breckner, member of the Executive Board for finance and IT. They will start by giving you a short recap of the previously released interest statement. Afterwards, we will jump directly into the question-and-answer session. [Operator Instructions].

At this time, it's my pleasure to hand over to Björn Scheib, Head of Investor Relations. Please go ahead, sir.

Good morning, and hello, and welcome to all of our analysts and investors. For this first half, 2025 results of Porsche AG. My name is Björn Scheib and with me is our CEO, Oliver Blume, and our CFO, Jochen Breckner. Today, we would like to give you a brief insight of our business performance of the first half of 2025. All materials such as the investors back or half year financial report are available in the Investors section of the Porsche website.

Before we begin, let me remind you that any forward-looking statements we will be making during this statement are subject to the risks and uncertainties mentioned in the safe harbor statement included in the Porsche materials. This intro will also be governed by this language.

With that said, I'd like to hand over to Oli.

Yes. Thank you very much, Bjorn. Good morning to everyone, and thank you for joining us today. Together with our CFO, Jochen Breckner, will walk you through Porsche's performance in the first half of 2025 and the strategic actions we are taking. Let me start with a big picture. Porsche continues to build on a strong foundation, loyal customer base, a compelling and refreshed product portfolio and one of the most iconic brands in the world. Our new product portfolio is resonating well. In the first half of 2025, we achieved record sales in North America and our overseas markets counting over 70 markets there. We secured top ranking in J.D. Power's appeal study, the all electric Macan and Taycan are performing strongly in Europe, where 57% of deliveries were electrified, including plug-in hybrids and exceeding our IPO target.

Our demands on exclusive options and one-offs from [ Zonda Bunge ] remains exceptionally high and, for example, paid to sample continues to exceed capacity. At the same time, we are facing significant global challenges. The macroeconomic and regulatory environment has deteriorated rapidly, in particular, the slower-than-expected ramp-up of e-mobility in key markets and exclusive segments is impacting our business more than others. We are experiencing a crisis of framework conditions and our current performance does not meet our expectations, being very clear. Other stands for excellence in product and in business results. That remains our ambitions. We want the best sports cars, technologies and innovations in the world to continue coming from our holds in the future. We have comprehensively analyzed the situation and drawn the necessary conclusions, Initial measures have already been initiated happening customer orientation in the product portfolio and rescaling our organization.

Key elements of our new product strategy decided so far include a more flexible mix of ICE, plug-in hybrids and BEV offerings introduction of a combustion-powered SUV by decade's end, extended availability of Cayenne and Panamera ICE and hybrid variants expansion of halo vehicles, exclusive and Zondervan program. The risky operations and strengthen resilience, we have already initiated key measures comprehensive workforce reduction by 2029. As of 15%, this corresponds to around 1,900 direct and around 2,000 fixed-term roads, acceleration of [indiscernible] initiatives to enhance cost saving. And we are also taking these [indiscernible] in China. We are making our dealer network more efficient. We continue to invest in high demand locations, but where long-term profitability is no longer viable.

We reduced our footprint from around 150 dealerships to about 100 by 2027. And we are acting consistently in this regard. We are continuously evaluating further areas of action with the framework of our strategy to sustainably position Porsche for the future. extraordinary expenses related to the strategic realignment and tariffs totaled approximately EUR 1.1 billion with associated cash outflows of around EUR 500 million to date. These factors had a significant negative impact on our operating results and net cash flow in the first half of the year. While these measures in connection with our strategic realignment are currently heavily dilutive to our performance.

They are critical investments aimed at strengthening our long-term profitability and resilience in response to a fundamentally transformed market environment. 2025 is our year of transition. We expect to reach the low point this year and begin to see positive momentum from 2026 onwards.

And now Jochen will take you through our financials. Please, Jochen, up to you.

Yes. Oliver, thank you very much and also good morning from my side. Thanks for everyone for dialing in and your interest in our numbers. So it's a pleasure to present our results for the first half of 2025. In H1, Porsche delivered 146,000 vehicles with sales of approximately 135,000 units reflecting an 11% year-on-year decline. Despite headwinds, the Macan stood out as the top-selling model with over 43,000 units, including 25,000 fully electric vehicles. You can see the all-electric Macan is gaining strong traction in slowly emerging BAF exclusive markets, highlighting its strategic importance and market appeal. The BEV and the Macan performed strongly and became our best-selling model. Given these adverse market conditions, incoming orders remain robust, reflecting strong brand desirability and a favorable product mix.

Demand for individualization options remains unchanged high. Due to positive pricing and growth in Financial Services, group revenues declined underproportionally by 7% to EUR 18.2 billion. As Oli outlined, before we accounted for extraordinary expenses in connection with our strategic realignment and tariffs of approximately EUR 1.1 billion of which around EUR 500 million resulted from battery-related impairments and operations and around EUR 400 million from U.S. import tariffs. As a result, Porsche's group operating profit decreased to EUR 1 billion in the first half of 2025 with an operating return on sales of 5.5%. The operating result in our Automotive segment was EUR 800 million, translating to a return on sales of 5.2%.

Nearly all of the extraordinary charges previously outlined were concentrated in this segment. G&L accounted R&D expenses increased by EUR 200 million to EUR 1.3 billion due to a significantly lower capitalization ratio of 46% and higher depreciation of formula capitalized R&D. Net cash flow from automotive activities amounted to EUR 400 million and includes extraordinary outflows of around EUR 500 million in connection with the strategic realignment and tariffs.

With that, let me turn to the outlook. We plan to continue our model offensive and customer-focused product strategy. Porsche remains well positioned from both a product and pricing perspective.

There are also no changes to our underlying assumptions regarding our unit sales supply chain conditions and cost trends. Based on this framework, Porsche would have been in a position to reaffirm its original outlook despite ongoing market headwinds. Porsche remains a strong advocate for dialogue, open markets and stable trade relations. These are fundamental to a competitive economy, especially for the automotive industry and our company. Following the EU U.S. agreement on U.S. tariffs reached Sunday, we have revised our 2025 outlook to reflect both the newly announced and previously excluded June tariff measures. Our updated forecast now incorporates the 15% import tariffs expected as effective from August 1, alongside potential mitigation strategies. These include pricing adjustments designed to partially offset the financial impact.

As a result, we expect group revenue in the range of EUR 37 billion to EUR 38 billion, unchanged from our previous guidance. At the lower end of the bandwidth, we anticipate a group return on sales of 5% and an automotive net cash flow margin of around 3%. At the upper end of the bandwidth, the group return on sales is expected to reach 7% and an automotive net cash flow margin of 5%. This upper end remains well within the range of our initial guidance from the end of April. The full year return on sales outlook includes expected extraordinary expenses in connection with our strategic realignment initiatives of around EUR 1.3 billion and expected tariff burdens in the high triple-digit millions. The fiscal year automotive net cash flow margin outlook includes expected outflows in connection with our strategic realignment initiatives of around EUR 500 million and tariff payments in the mid- to high triple-digit millions.

Additionally, we maintained a robust currency hedging strategy with substantial exposure already secured for 2025 and partially also beyond. Considering the geopolitical and industrial dynamics, our strategic realignment activities will be expanded to increase our financial resilience. In addition to these immediate measures, as Oliver mentioned earlier, management and works council will negotiate an additional structural package in the second half of the year. These efforts are aimed to support our financial resilience and future earnings and cash flow. Before closing, let me briefly touch on our capital allocation strategy.

Due to additional product initiatives tied to our strategic realignment, we affect R&D spending to peak this year and next before declining. Our strong cash conversion is expected to underpin our commitment to a 50% dividend payout. We plan to maintain automotive net liquidity within our target range of 15% to 20% of segment revenue.

With that, I hand over to Oliver. Thank you very much.

Yes. Thank you, Jochen, for the insights. And as you can see, our first half of 2025 performance was shaped by persistent macroeconomic and geopolitical here alongside a proactive strategic realignment but we are using it to move forward. We are rescaling and recalibrating our company. That puts additional pressure on our results, but we are willing to accept it. Our goal is clear to sharpen our brand to make our products even more individual, more exclusive and more desirable and to our position Porsche enter position Porsche for strong and long-term profitability. We expect it to move through the lowest point this year and begin to see positive momentum from 2026 onwards, a more balanced drive frame portfolio from 2028 onward will enhance market positioning and underpin sustainable long-term growth.

Thank you very much. And with this, I would like to hand over to Bjorn.

Thank you, Oli, and thank you, Jochen. We will now begin with the Q&A session. [Operator Instructions] And first in the row will be Tim Rokossa of Deutsche Bank. And second in the row will be Jose from JPMorgan.

Oli, I think the first question goes to you. As you already said, the key here to understand for investors is clearly is this really the trough for Porsche. We already discussed this during the VW call. The Porsche business is in the unusual situation of actually having a very good product portfolio already that customers want to buy, but there is no growth and margins are very weak because of everything that's going on in the world. How can we get confidence in this is indeed the turning point is the efficiency program sufficiently done is the ramp-up now all on time? Is it really just on getting a bit more clarity on the tariff situation now?

And then hopefully, China not getting much worse or which stars have to align for this to really be the trough. And related to that, given that how big of the impact it is -- where do we stand on the tariff situation in your view? Is this deal it? Or is there a chance for a more company or industry-specific deal that includes export or investment credits. Oli sounded pretty downbeat on that. possibility of his call just now. And Jochen, to you, thinking about the performance program, actually, where do we stand regarding that in terms of financial impact? How many people have signed already? How much are still do? Is there a Phase II? How should we think about the performance program at this point?

Yes, Tim, thanks for your questions. And I would like to start with the first one in terms of are we touching the bottom this year? Very -- to be very clear, we think, yes, because we are in the middle of our restructuring and realigning program we have taken important decisions on our product portfolio. The current one, as you mentioned, is performing quite well. But at the end, it depends also on the market. And now we are continuing this year with the 911 the next year with the electric Cayenne, followed by the electric 718 and much more in a row. And so we think on this point and with more flexibility in the future, we are very well positioned.

On the other side, we need to rescale our company because 20% from China are missing. And we expect, let's say, won't come back and therefore, our task now is to adapt our business in China being still profitable on a volume level of around 40,000 units. We think this will be -- will be able. We improve our products, especially in terms of software being with this in the market in -- then we will come with a very special offers for the electric -- can in the market, and we improved our exclusive business in China, especially for the Tutors sports cars. What we have not done so far in the past. And there we see special potential also with city showrooms and the big mega cities of China. So lower volume but much more value orientation.

So I think we will come back in China. In terms of tariffs, I agree what Oli said that we won't have a specific automotive deal. We have had a lot of meetings there with the Minister of Trade but I think we will continue also with talks on a very attractive investment package coming from the Volkswagen Group with the many brands which we are acting in the U.S. And so we maybe there would be an opportunity also to make a separate deal, which has nothing to do with the tariffs. But beside of this, which can support at the end also our activities. We waited for the deal with in U.S. and EU. Now we have clarity, and then we will continue with our offers in the U.S.

And then I hand over to Jochen to the second part of your question.

Yes. Oli, thanks and Tim, thanks for the question. So our strategic realignment measures are really targeted and consistently executed and are designed to strengthen our financial resilience and position for, yes, let's call it, sustainable value creation. Now on the concrete point that you were mentioning in terms of positions where we communicated that we will reduce them at Porsche we are very well on the way, achieving good progress. We communicated that we will not extend around 2,000 fixed-term contract positions. Most of these have already expired. The remainder will -- or the biggest part of the remainder will expire in 2025.

On top of that, we decided that we wanted to reduce an additional 1,900 positions for what we call the indirect personnel. So that's mainly R&D and SG&A staff in the company. We do that in a socially acceptable way with the programs where we help the people believe at the company. The demand and the interest in these programs is in line with what we've expected. So that we are really confident that we will achieve the target of reducing the indirect workforce by the 1,900 FTEs by 2029. In the letter comes with a cost because we need the programs to make the people move. We had communicated at the beginning of the year that we see a EUR 300 million burden for the full year for these programs. That's still our estimate in the first half of the year, we have booked around EUR 100 million of these expenses.

Next in the row is Jose from JPMorgan. And thereafter, we have then Harald of Citi.

Just a couple of questions, please. Can you first comment on the -- on the speed of change and how quickly can you reset some of the product portfolio within the Porsche product lineup that needs to be reaccelerated and reboosted in the next, let's say, 12, 16 months? How quickly can you do this? And what is the sense of urgency within the house? And second, also maybe also for Oliver, for you. When you look at China, which vehicles do you think resonate with customers, which do you think at a difficult point in -- for the business in China, which vehicles are for you, absolute core pillar for the profitability of the business model in China? And what are you looking to launch again in the region to reengage customers in that sales moving to?

Okay, Jose. Let me start with our product portfolio. First of all, we have a complete new product portfolio. which is performing quite well in the markets. And also when you look to electromobility, this works for Porsche, and we achieved in Europe, for example, 36% bets in the first half of this year and 57% electrified vehicles, including the plugging hybrid -- that's higher what we expected in the IPO period. And we are over 50% in Europe. So the products are well accepted, but the overall market volume is much lower than we expected years, years ago. And that puts our business under pressure in terms of our investments we have done internally in terms of capacity, but also in our supply chain that costs money. That's the first aspect.

What we are doing? We adapt now, and we call it kind of hedging, what we have done already in the Cayenne segment with combustion engine, hybrid and now from the next year on a fully electric can. And the same we will do now in the B SUV segment, there we have the electric Macan, which is performing in the segment quite well with over 30% market share, which is huge, but on a lower volume than expected. And now we will add, again, a combustion engine and a very performing hybrid in this segment from the end of the decade. In our Tudor sports car segment, we are coming with new derivates. We're investing currently, there we will be a bit quicker.

And so with the lineup, we do have now with the 911 Tubes, having brought in order, the battery issue there. We will have our icon in the market, then continued by the Cayenne, then we will bring the 718. So our product portfolio is well balanced. And now with more investments even more flexible than before in all segments, and that's a positive perspective, medium and long term. In terms of China, we count on the very successful Cayenne [indiscernible] always, these both products with combustion engine hybrid, we're very successful. What we are doing now is making them even more attractive with special Chinese digital offers, which we developed in China for China and also with abilities for autonomous driving then we count on more exclusivity.

The future -- past business in China was more to send pre-configurated cars to China, sell them easily and now the market has changed. And so now we are counting more than in other regions of the world for exclusivity for the installing city showrooms and promoting especially the opportunities we do have an exclusivity with more than 1,000 options. And there, we think, and the first response in the market was very positive, the Shanghai Auto Show that we can hit the taste of the Chinese customers. And then in terms of electromobility, the luxury segment still does not exist. But we think with our new Cayenne, which is a completely new world in the automotive industry for electromobility in terms of performance, driving abilities, but also a completely new design interior, exterior, completely new infotainment and so offerings of automated driving functions.

We think there is a great opportunity. So summing up, Cayenne Panamera, still important in China with new offers in terms of infotainment, then 9/11 exclusivity. And the third pillar will be still electric mobility with our approach with new Cayenne from the next year onwards.

Very good. The next in the road then will be Harald of Citi, and he will be followed by Patrick of UBS.

So 2 quick questions. One, just on the structural packages and stuff like that. I just wanted to understand from you guys I mean, how you're looking at the second quarter and where push is today, right? So you've reported 2.6% margin. If we exclude some of those exceptionals, specifically the non-tariff exceptional, you're still doing over 10% margin on an underlying basis in the business. And in the past, you've always said you think Porsche should get back to 15% to 17%. So can you give us some idea, particularly with regard to the structural realignment how do we go back from the 10% underlying back to that 15% to 17% and some sort of potential time line?

And then my second question is, and I think a reasonable question. Oliver, I know you've been super close to the tariff negotiations and obviously the meeting that you have. It's clear that some European countries are not as happy with the new EU U.S. deal as other countries. Do you foresee any risks at all to the framework agreement that was announced over the weekend?

Let me start with the question on Q2 and also on the question of the midterm ambition of the 15% to 17%. So you're right. Q2 margin was 2.6% and that was pretty much under pressure due to some special expenses. We had EUR 1.1 billion were posted in H1. So in the first half of the year for tariffs, but also for our strategic realignment when it comes to products and when it comes to the product strategy as well as the organizational structural realignment that we are doing. So on an operational level, we are running on a -- yes, will be above that return of sales level, for sure, and that's also our ambition -- now the strategic realignments that we are doing are taking some time until you will see the full positive momentum and the full positive impact.

So the ambition remains that we definitely come back to 2-digit return on sales numbers. We will see the trough this year with the lowest point in terms of in terms of the seasonality over the years. And then we are currently assessing timing when we will reach the old ambition, which is still a valid one. But as we said, it's going to be tough in the few years to come to reach that level. But the strategic realignments are very important. We are convinced that they will pay off at the end of the day. And therefore, we are pushing the company in that direction.

Coming to your point on tariffs. On the EU level to compare the situation before with a new deal. It's not only about the 15%. We have a data of 22.5% in between Europe and U.S. are in a negative direction. Talking about the 15% in the U.S. because Porsche has got a 100% export business. For us, it's 12.5% higher than before. And there, we are in the position that we have the opportunity on pricing. And our segment is not so sensitive. And we have products and the power in the market. And this has shown the record sales, 11% higher in the first half of this year than last year. And our proved momentum is there. We have a huge fan base in the U.S. is our biggest single market and we see pricing opportunities to compensate part of the tariff.

On the other side, while we are not expecting a specific automotive deal beside of the tariff. We continue with our activities offering this huge investment package from Volkswagen Group with our in America acting brands like Volkswagen, Audi but AutoScout international and our technology investments into Rivian. Porsche also is a part of it. And to use this for special separate deals, which can compensate part of the tariff. And there, we will continue to do so. Now we have clarity on the tariff level and maybe there will be opportunity beside of this, not linked to the tariffs.

So can I just clarify -- sorry, Oli, my question was really, do you see any political danger in Europe that the deal does not get completed at 15%. France particularly seems to be unhappy with the deal. Do you see any such risks?

I think nobody is happy. Higher tariffs also is bad for our business sheet. But each company now has to find its position in the new situation at Porsche, we are very clear what we have to do, and we have opportunities. That's a positive message for Porsche. But in total, for the global European industry, I think there, each company has to think how to act in the U.S. and our path for the Volkswagen Group is clear and we are Porsche at the end maybe could benefit is when we come to a separate deal in terms of investment in the country. But I agree completely what you have said that the level what we got with the deal isn't a positive outcome.

So next in the row then will be Patrick of UBS. And he will be followed by Stephen of Bernstein.

I have 2 questions, please. The first one is on that second realignment package that's currently under negotiation. If I take a step back, and I look at your top line, your volumes, I think it's fair that the new Porsche has to be built for about 20% less volume than maybe expected a couple of years ago. The first package is about a 5% head count reduction I get it that more top end, more exclusivity, more [indiscernible] also require some resources. But is it fair to say that the second package actually needs to be larger than the first one in order to restore profitability where it needs to be for a luxury brand like Porsche. And if you can just share a bit of color on the nature of the measures you have in mind? Is it just a continuation of voluntary measures or what else is going to be in there?

And my Second question, and I'm not sure if I agree with what has been said before about the underlying margin. If I look at your guide for the second half, basically, you're guiding to, say, 6%, 7% margin in the second half. Yes, a bit of realignment costs in there, but the tariff is here to stay. So I wonder with the view of 2026, can we be confident that you bring this business back to more than 10% margin already next year? And what would you say are the key levers to get there, more pricing, more restructuring benefits or anything else?

Yes, Patrick, let me start with the structural package that we announced that we will negotiate in the second half of the year, and let me put that into context of what we've agreed so far and what we also achieved so far. So as I said before, we agreed that 2,000 fixed-term contracts will expire and that we will reduce around about 2,000 exact 1,900 indirect positions over the course of the next few years until 2029. These numbers needs to be put into a relation with our core business at our headquarter company. So when you take the total workforce for the whole Porsche group, including, for example, such companies as MHP, our IT service and consulting company, they alone have around 4,500 employees. That's a completely different business. So not targeting these businesses there. So in terms of percentages, we're not talking 5%, we're talking rather 15% in reduction, and that is well in line with what you've also mentioned that our volumes that we will achieve while following our value over volume strategy are lower than we initially planned 1.5, 2 or 3 years ago.

Now when it comes to the second structural package, it's a bit too early, unfortunately, talk about details because we haven't started the negotiations yet. We have announced that we will -- we will start the negotiations straight away after the summer break. So that is discussed with the works councils, but we have not exchanged the details yet. Negotiations have not started, and we will do that internally with our colleagues from the work council and yes, once we have agreements, we will, of course, incorporate these and bake them into our numbers and also communicate them to the public and what we've said is that the structural package to needs to be a big one, a decisive one for the company.

But as of now, it's not possible to compare it to what we've already achieved so far. Then the second point you were raising was about '26, about a 2-digit return on sales numbers in 2026. So as you know, we are not guiding the next year in detail. We will do that with the annual report in the beginning of 2025. But what we can say is that given all the special expenses we already had in H1 and the additional special expenses we expect also in H2 and also giving the first positive momentum from product strategy and strategic realignment in 2025 will be the trough. 2026 will be a better year, and that's what we are fighting for, and that's how we put the position that we put the company into. But no precise number as of now.

Got it. So too early to say whether double digit or not next year, basically.

Yes. Too early to say maybe as an addition, we were talking a return on sales now also when it comes to cash flow, we will see the same shape. So also in terms of cash flow, cash flow margin, we expect 2025 to be the trough because not all but a bigger part of the special expenses we have in 2025 are also cash relevant.

Next in a row will be Stephen of Bernstein and thereafter, we're going to have Michael of HSBC.

I have 2 questions. First of all, a clarification. Oliver, you mentioned that the replacement or the vehicle that will be in the segment of the Macan ICE will come at the end of the decade. That is not a change from sort of previous communication, which suggesting was coming around 2028. So it's not coming later than 2028. That's my first question. And secondly, looking at the U.S. market, with some of the changes in the structure, first of all, with the ending of the lease credit, the $75,000 were the deals were out a claim from the U.S. government, which helped them event leases and which obviously have been very effective in selling the Macan BV.

How do you see things developing after that for your BV sales in the United States? And secondly, given also the changes to sort of like metal regulations that the U.S. administration is pushing through, do you think there's an opportunity to increase actually some more of your ICE vehicle sales?

May I start with product strategy. And you're right, we won't be later than 2028 with a B SUV ICE and Hybrid version. And that's what we said by the end of the decade, rolling out in all the markets. We are speeding up the process there with very short development times and making a very, very typical portion for this segment and also differentiated from the Bev Macan and so we think, especially for the SUVs now, then we have a complete flexible product lineup between Macan and Cayenne in all drivetrain versions. And then over to Jochen.

Yes. Thanks, Stephen. On the lease credit or the expiration of the expiry of the lease credits in the United States. That's for sure, an impact that we will see. It's a USD 7,500 credit that you are eligible to when it comes to lease contracts on bet vehicles. And of course, our products, both the Taycan and the Macan also benefited from that support. So once these budgets are cut from the official side, we will see increasing lease installments and pricing offers from our side, and we have not decided yet how we will treat this. But what we can say is we will stick to the value over volume strategy, and there's no way that we can that we can follow that amount against our margin and keep prices stable when it comes to the financial services products. There might be a strategy of smoothening the transition from the, say, former pricing to the new pricing over the time.

But in general, if official support are abandoned in either country or in any country then, of course, that's something that customers will experience. And then the last point you were mentioning were -- yes, it was the legislation when it comes to environmental rules that you need to comply with greenhouse gas and all the other. As of now, when it comes to our H1 financial statements, we have put the numbers in a way of the legislation as it stood on June 30. So we were not expecting any easing situation there. If these effects come into place. Of course, that would help both the provisions that we have in our balance sheet where we might be in a position to release some of them. And when it comes to product strategy, when it comes to product mix in the markets, of course, it will become more profitable to sell the ICE and plug-in hybrid vehicles as opposed to the electric vehicles.

But that's something that we will optimize in our production and sales steering once we have clarity on how an updated administration and regulation might look like.

And the next now is Michael of HSBC and thereafter, we're going to have Horst of Bank of America.

Just a couple of questions, if I can. Can we talk a little bit about China? Because the dealer body there, if I'm not wrong, I'm trying to remember what the exact number was, but you were cutting by was it 25% or 30% but sales are down over 50% from their peak. So I just wonder if there's more work that needs to be done on the dealer network in China. And then secondly, the changes to the threshold on the luxury tax side. Can you talk a bit about that? What's the impact of that for you? How much of your model range sits in that new threshold? And how will you deal with that? Does that mean just another headwind on China sales?

Yes, Mike, about the concrete figures of the so-called luxury segment, over RMB 800,000 there shrank in the last year of 34% in the first half of this year of 50%. And more than the half of our volume is playing there, and this describes the situation. We think now we have a more stable order intake situation since the last 3 months -- 3 months in China that we are calculating around 40,000 and 50,000 units in China, but we don't expect that we will come back to 100 over 100,000, what we expected some years ago. And we think this will be able by adapting our dealer network, as we said, 30% less. And then also checking where it is positive for us to invest in city showrooms and so on and to change a bit the customer touch points. And then about the product initiatives I already talked about. j

The luxury tax -- we're getting there. We think, especially in this segment, it hasn't got such a huge impact. A customer who wants to buy a luxury product at the end do not care about 10% as in small influence. But in our segment, we think that we have the pricing power. And so our focus is more now realigning rescaling. Our organization in China, the dealer network and what Jochen before explained also that the capacities in Germany for our 100% export business to China. And then I think we will be able to come back to a profitable or profitable in China with a lower volume in the region of 40,000 units.

Very good. So with this, then we move on to Horst. And after Horst then we have Anthony from ODDO.

Sorry, I need to come back again on this tariff stuff but question for Oli. Since you have been that specific about this potential CapEx credit, and you mentioned it also during this call all the time, by when could we see that implemented. So when could there be a potential agreement? Is there any time line you maybe can provide. Then to Jochen, you said that I think in your speech, you said that you expect the tariff impact of mid-triple digit to high triple digit. What does it depend on if it's mid-triple digit or high triple digits, so maybe you can clarify that? And then the last one, again on tariffs. I mean Audi and Volkswagen, they like to invest in U.S. and I understand what they should get a CapEx credit. So is there may be a risk that portion needs to compensate the Volkswagen Group for getting an indirect tariff benefit by getting part of this CapEx credit deal.

Horst, I would like to start with your 2 tariff questions. Before the tariff deal in between U.S. and EU, we were negotiating and fighting for a specific automotive deal. And we think now the closed deal, there won't be a specific automotive deal overall. But I'm still confident that with our investment offers. We do the U.S. What I mentioned for Volkswagen, Audi, for Scout for International and what we are doing in Rivian. There could be an opportunity that we will get a special bonus. I would call it. I'm not going to get to the tariff part, which can support and compensate a part of the tariffs. We will continue now with the talks. We agreed not to do nothing in the finish line of the negotiations and with new and the U.S.

And now we are catching up the point already in August with the Secretary of Commerce and picking what will be possible. The package is attractive for the U.S. But at the end, we have to come to a special mode how to calculate it and benefiting this investments. In terms of compensation payments for Porsche, we didn't talk. We will integrate Porsche, but also Lamborghini, Bentley, Ducati who all don't invest in capacities in the U.S. into this deal. On the one hand side, a investment should be feasible for the investor. And at the end, a second effect could be to connect the brands of Volkswagen Group which are not investing. And that's all one part of my double role where I can put everything under one umbrella. And so this one is very, very helpful to speak for all brands who are connected with Volkswagen Group.

First on the tariff impact, we had, as communicated, EUR 400 million in Q2, and that was the quarter where we had to pay the full 27.5%. And as you know, have not implemented any pricing because we agreed on a strategy to price protect our customers in such a volatile and uncertain situation. Now when it comes to the full year, what you should not do is that you would take the EUR 400 million for Q3 and Q4 for 2 reasons. First, as of August 1, we expect the tariffs to come down to 15%. And second, we've already implemented pricing measures in early June with 2.3% to 3.6% of additional increases due to the inflationary impacts. When we talked about mid- to high 3-digit numbers there, a mid number would be EUR 500 million, a high number would be EUR 999 million, so mid- to high is well in between these numbers. And that's our estimation of the net effect for the full year, given the assumptions I've just mentioned, especially that will see the 15% as of with first.

Very good. So Jochen, thank you very much. As we have 10 minutes left only. We will now take the last 3 in a row, and gentlemen, please keep it short to give all of you the chance to ask your question. First in the row will be then Anthony of ODDO. Second will be Michael of [indiscernible] and last on this call will be Adrian of Redburn.

Just a final one on China. It's regarding the tightening of the financial condition, the financing conditions in the country. on the Mercedes Benz call, they mentioned that should have a positive impact on protein that they were seeing negative impact on volumes. First, just keen to have your opinion on what you were seeing from this tighter financial conditions and how you would expect that to impact your volumes and pricing and profitability maybe in the coming quarters?

Yes, thanks for the question. So looking at the China situation, I mean, as discussed back and forth, the market evolved completely friendly as opposed to what we've seen in our record years '22, '23 and also what we were expecting, how the market situation would be we are volume-wise down at a level of probably a bit more than 40,000 units this year. That's a level that we also see for the years to come. We see first stabilization elements. And having said that, that's a result of our value over volume strategy. So we deliberately cut production and reduced volumes to protect our brand to protect our price premiums. Having said that, of course, price competition is fierce in China, and it's still fierce.

We do not see easing elements there yet, although there were discussions also from the government side that but they will scrutinize the situation and see that there are no say, to small prices from the local players devastating the markets. But looking at our segments, there is still fierce price competitions and dealers do what they have to do. But from our side, we protect prices. And what we've done is that we've launched a few special models, Cayenne also with the Macan, where we had launched products with a better proposition to the customers additional options in the current bit of a lower price, but still very well positioned above everything that you see in the competition and that's how we run the pricing and also volume strategy in the market. Of course, that's less than we had achieved, and therefore, we do the restructuring work both locally in China with the dealer body with our own organization, but also here in our headquarters.

Okay. I see on the list that Michael dropped off. So last in the road then would be Adrian of Redburn.

Maybe a last one for me. Just related to the automotive net cash flow. So around EUR 400 million in H1. So the guidance of the midpoint suggesting around EUR 1 billion in the back half of the year. Just in terms of thinking that through, is there any working capital tailwinds that you'd like to highlight that we should consider and maybe even consider phasing it between Q3 and Q4, also thinking through the tariff costs, if there's any kind of disjoint between the P&L cost that you had in the quarter and then thinking about that in the second half of the year. So really just thinking about the phasing of free cash flow, please?

When it comes to free cash flow, the second half will be better than the first half. That's clear. As you said, you can see that in our guidance and we will see tailwinds from working capital. That's correct. We will see first positive effects also already in Q3 and then for the year-end optimizing our supply chain and the stock levels that we have in the markets. We've already decreased dealer stock, which is also important when it comes to pricing pressure so that we have an alignment of demand and supply in the market. But when it comes to the stock levels on our books, we will definitely have a reduced stock level in the second half of the year.

And that's also due to the fact that we held back some of the volumes, especially in the U.S.A., given the tariff situation and also the open pricing decisions we have not taken yet so we deliberately held back a stock on our books so that we can release that stock at updated prices that we have agreed on.

Gentlemen, thank you very much for your questions. We hope that we could serve you with your interest in our business, financial and strategic outlook. For the ones of you that we're going to see tomorrow in London, we're going to look forward to see you there. For the ones who are going to meet us in Frankfurt, virtually and New York at the end of the week, stay tuned. And for the ones we're going to see next week in Canada, prepare your questions. For all of you who's going to go on holidays now, we fully understand this was a quite busy reporting day for all of you. Thank you very much for your patience. Thank you very much for your interest. Have a good rest. Stay healthy, and we look forward to see you after the summer break. Bye-bye.

Thanks for joining.

Thanks, everyone. Bye-bye. Talk soon.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.