Luxury car maker Porsche fell more than 5 percent on Tuesday after it sharply cut its outlook for future sales and profits. Quote Unexpected aluminum alloy supply shortage.
The German carmaker said floods at an undisclosed European contractor have hit supplies of aluminum alloys, affecting production of all its models and potentially leading to the halt of production of one or more models.
“It is clear that the impending supply shortage will lead to production bottlenecks. The situation is expected to continue for several weeks and may even lead to the suspension of production of one or more vehicle models,” Porsche said in a statement.
Porsche AG said it expects sales to drop by $42 billion to $44 billion because of flooding at an aluminum supplier’s production facilities. The company had previously forecast sales of $44 billion to $45.5 billion.
Bernstein analysts said the flooding would hit a supplier in Switzerland and lead to production losses of at least 10,000 to 17,400 vehicles in the second half of 2024.
At its highest, this figure represents more than 11 percent of Porsche’s deliveries in the first half of the year.
The company now expects its profit margin on sales to be 14% to 15% this year, down from its previous forecast of 15% to 17%.
The alloy shortage also affected the supply chains of other German luxury car makers, including BMW and Mercedes-Benz, but both were able to find alternative suppliers.
Porsche SE, the holding company for the Porsche and Piëch families that run Volkswagen and hold a blocking minority stake in Porsche AG, confirmed its 2024 profit forecast despite the warning from its alloy supplier.
The aluminum alloy shortage adds to other challenges Porsche has faced in recent months, including software issues, product delays, supply chain problems and sluggish sales in China.
Global shipments fell 7% in the first half of the year due to declining sales in China.
Porsche has also struggled to sell electric vehicles this year, and on Monday the automaker shelved its electric car efforts, citing customer demand and trends in the electric-vehicle industry.
The company will report its first-half results on Wednesday.
